During an interview with Andy Serwer, Brian Chesky gave a very interesting and detailed exposé that vacation rental managers, Airbnb hosts and short-term rental operators should read. Here’s the major topics that this interview covered:
- How travel has changed in 2020 (e.g. international and business travel will be hit for a long time),
- Which activities Airbnb has stopped or paused (e.g. Airbnb Luxe and Airbnb Plus) to focus on Homes and Experiences,
- Why he reshuffled the top management layer of the company as a result as this more focused approached (bigger focus on the hosting experience, especially from individual hosts rather than from large property management companies),
- How 2020 Airbnb business numbers now rival those of 2019, while costs such as advertising have been drastically cut off,
- What the biggest and most difficult decisions have been during the crisis (i.e. refunding guests while angering hosts, and laying off 1,900 employees),
- Why Airbnb is thinking again about going public,
- What Airbnb is doing to help with social and racial justice.
Video: Airbnb CEO Brian Chesky on Influencers with Andy Serwer
Interview transcript: Airbnb CEO discusses how the coronavirus pandemic ‘changed travel forever’
Andy Serwer:
Unable to pay his bills, Brian Chesky began renting out space on his apartment floor, offering his guests an air mattress to sleep on. He called it Air Bed and Breakfast, and thus Airbnb was born. Today, the company has helped to board more than 750 million guests in over 220 countries around the world. Together, he and his co-founders have upended the travel industry, forcing legacy hotel chains to reevaluate their businesses, and helping to create an entirely new kind of tourism. In this episode of Influencers, I speak with Airbnb CEO Brian Chesky about his vision for the future and why he says travel will never be the same.
Andy Serwer:
Hello everyone, and welcome to Influencers. I’m Andy Serwer. And welcome to our guest, Brian Chesky, who is the co-founder and CEO of Airbnb. Brian, nice to see.
Brian Chesky:
Oh, thank you Andy. Nice to see you.
Andy Serwer:
So I guess let’s just take a big swing question first. What was it like when coronavirus started to unfold and you started realizing the impact on the company and the business?
Brian Chesky:
We started the company over a decade ago and I thought that was the craziest experience of my professional life. And for many years I said I’ll probably never experience something as crazy as starting Airbnb. And in March I think we experienced that. We spent 12 years building our business, and within six weeks lost about 80% of it. And when a business drops that quickly, not only there’s this feeling of losing much of what you’ve created, but things start breaking. Right? Like suddenly guests wanted more than a billion dollars of refunds. And you can’t really plan for pandemic related refunds, because people are counting on that money to pay their rent or pay their mortgage. And so it just kind of felt like you’re on a ship and you just get sideswiped. And it was incredibly intense. It felt like everything was breaking at once.
Andy Serwer:
So right now it’s tricky too though. I mean, let’s be honest, because it appeared like we were on this path to recovery. Right? And then all sudden we’ve seen this resurgence. And then of course we realized the degree to which different states, it’s always been that way, but even more so now maybe, different states present different problems. So where do things stand right now? And maybe even more important, how do even begin to manage things going forward?
Brian Chesky:
Yeah. Well, the thing, Andy, it’s really good to point out is that Airbnb is in 190 or so countries. And so we kind of get to see the experiment of different countries’ approaches play out because we’re also a very large scene in Italy, and Italy also had a huge surge around the same time the United States did. And now Italy has, it seems like, it’s a little different place. And what we’re seeing in the United States is that the United States had a definite initial recovery. And it’s now, I think, we’re going to expect it to slow down. But one of the things we’re seeing is a totally different way that people are traveling. Before COVID people traveled a lot for business. They got on airplanes, they crossed borders, and they went to big cities. And in those cities, they stayed in these central hotel districts.
And now a whole bunch of things are happening. People are saying they do want to get out of the house, regardless of what country they’re in. They do have this need to get out of their house, but they aren’t right now super comfortable getting on airplanes. They want to get on cars, and they want to travel not more than 300 miles away or 200 miles, a tank of gas. They’re going for leisure, they’re going to not big cities, they’re going rural, they want to get outdoors, they want to discover the outdoor communities. And most of all, they’re looking to stay in homes. And so that has been a surprise to us, maybe the extent that we’ve seen demand come back. What I mean by that is the last few weeks we’ve seen volumes of business that are actually the same size volume as a year ago. When it was April, or even beginning of May, I could have never, ever imagined that it would have been that resilient.
And this may be pent up demand. I think you’re seeing a little bit of it. I think one of the things you’re seeing is people are sheltering in place in other homes. So they’re basically saying work from home is now work from any home, and maybe I want to get a different home on Airbnb. So they’re getting longer-term stays. But I think it’s going to be a start and stop, and I do think this is going to be probably a long, long road. Probably longer for the United States because it’s been pretty uncoordinated. And again, we just see this experiment. We have 190 countries, so we can perfectly play out, see what’s playing out in all these different countries.
Andy Serwer:
Yeah. So how are you changing the business Brian, if you’re suggesting that maybe people are looking for rural destinations, but closer to urban centers? Maybe the stays are longer because they’re looking to actually stay there for a month to work. Is that right? And then how would you change what you’re doing?
Brian Chesky:
Yeah, there’s really the short term and the long term.
In the short term, we are really focused on two things. Number one, we’re focused on really nearby stays. So people looking to stay in a home a couple 100 miles from where they live in these smaller communities, where they can get in the car and they drive too. And they’re often a little bit longer, sometimes they’re even on a monthly rental or an entire summer rental. And really like things that are unique, special, one of a kind. So this is really the short term. We’re also focused on online experiences. So we have this experiences offering, but we can’t bring people together. So you can go online. And we’re launching, for example, 100 Olympic athletes are offering online experiences in a couple of weeks when the Olympics would have happened in Tokyo, that obviously got postponed. Well, a huge amount of Olympians have to pay for their own training. They’re not sponsored. This is a very important way to earn income, and we want to be able to connect athletes. So that’s the short term. Nearby stays and online experiences doing things like Olympic athletes.
But there’s a much bigger transformation I think is happening for the company. Because I think that COVID has been an incredibly harrowing and traumatizing experience, it’s been very difficult for many people. And I think the pandemic has also been like a bit of a reset for a lot of people. And I think it’s been a reset for us too. When you start losing things and you’ll go through a crisis, our business kind of flashed before our eyes. And in that period of time, we asked ourselves like, “Well, who do we want to become? What don’t we want to still lose? What do we want to hold on to? If we can’t keep everything, what is the most core to Airbnb? What’s the reason that people would still want this company to exist? Why do they want to root for us?” And what we thought was, well, there really was something special when we started. It was this idea that it wasn’t just a place to stay. It was really about connecting people. And it wasn’t for everyone.
But if you were a kind of open-minded, kind of curious person, you could go to a different kind of community and connect with people, even if you didn’t meet them. And we think that’s the roots of Airbnb. So we want to get back to the roots. And that means that a lot of things that we were doing before, when we had a huge amount of abundance, we’re not going to do as much anymore. But I think sometimes getting back to your roots, back to the basics, back to what is most different and most core and special about you, that’s never a bad thing. And it’s kind of hard when you’re on this runaway train that we felt like we were kind of on for many years. But it’s been a moment of a little bit of like, “Okay, we’re going to focus.”
Andy Serwer:
What are you not going to do anymore?
Brian Chesky:
We’ve scaled back quite a lot of efforts.
- So we still have a hotel offering, HotelTonight, which I’m very proud of. But we have scaled back the ambitious expansion plan, so we’re going to be very, very focused on how we’re curating that offering.
- We have a luxury product, which we are not expanding as much.
- Business travel, we’re not doing as much. You can still use Airbnb for business travel, but we had a big kind of enterprise support, like where you’d work with travel managers. It’s going to be more self-serve.
- Airbnb Plus is now on pause.
- We’ve paused our transportation efforts. We had, I thought, a really exciting transportation, really a way to book a flight on Airbnb. We’ve paused that.
- We’ve paused content.
- And some of the really large property management companies that need additional support and software. Well, we’re not doing as much there. So that’s a lot.
And all in all we’ve paused more than a majority of our projects. So it’s been a real focusing effort for the company. And the thing that’s been exciting is to see, even though we’ve paused, the businesses can still come back. And I think that’s an important testament to maybe the foundation that we built.
Andy Serwer:
Fascinating. So you always to one degree or another compete with traditional legacy hotels. And I’m just wondering, do you think that COVID has changed the competitive landscape giving either them or you more of an advantage?
Brian Chesky:
Hard to say. I mean, here’s what I would say. Travel is changed forever. The world of travel as we knew it in January is never coming back. It’s never coming back. I feel very confident about that. What I’m not totally sure about is what is going to come back, and that’s just guessing the future. But it’s pretty easy to know, once like 100s of millions of people experience Zoom, and they realized they don’t need to travel for work. People will travel for work again, just not everyone. Some people are going to realize now they can do this thing. A whole bunch of people who thought they had to get on an airplane and go to a city and stay in a central district realizes, “Well, there’s 400 national parks in the United States. And I live near one. And maybe I should go see a national park.” And suddenly, you can’t undo all this knowledge.
So where I think travel’s going, is it’s going to go from primarily business travel, going to big urban areas, staying in big central districts, to people traveling more for leisure to smaller communities near them. And I think this is an unmistakable trend. How much of it shifts this way? I don’t know, but I know it’s going to shift, and it’s never going back. And I think mass tourism, people being in line to get selfies in front of landmarks. I think that’s not going away, but that’s going to get smaller. Because a new generation of people want, I think, a more authentic experience. So I think that’s where this is going.
Andy Serwer:
Do you support or oppose those travel restrictions imposed by governors like New York’s Andrew Cuomo on people entering states from other states with worse outbreaks, Brian?
Brian Chesky:
I think it definitely is a case by case basis. So I mean our general principle is that we want to treat every city and country kind of uniquely. And we try to work with local communities to make sure that we’re honoring what is best for them. And so if communities ask us to do things. Like we shut down a lot of Airbnbs in the United Kingdom when they didn’t really want people traveling. We did it in and around London. And so we try to work with different cities, learn the nuances. And we tried not to have one size fits all. So that’s generally the way we approach this.
Andy Serwer:
You recently sent a letter to employees talking about a management shakeup. And I’m wondering if you can talk about that a little bit? And you addressed your employees recently as well.
Brian Chesky:
Yeah. So again, and this is when COVID happened, the world changed, travel changed, and Airbnb had to change. And that meant our strategy had to change. We had to get really back to the fundamentals, back to our roots. But that also means that our management team had to change a little bit to go back. And the idea that Airbnb was going to kind of be in a sprawling expansion, that we had to kind of narrow in, we realized, “Well, what are we really going to be offering? We’re going to get back to great hosting.” And so we had a Homes offering. We had an Experiences offering, and I had two leaders. We decided to bring it together to one group, and we had to have one leader lead it. And we chose to put Catherine Powell in that position. She was at Disney for 15 years. She ran Disneyland Paris, Disney World, Disneyland.
And the reason why is because she managed 120,000 cast members at Disney, delivering and magic every day. It’s very similar to host. And so we really wanted to be a community first, a marketplace second. And so we’ve really put her in place with hosting. And then we thought, “Well, if we’re going to do something for getting back to our roots, back to this thing that’s really different, we have to tell people about how it’s different. And we need to rethink marketing. And we need to do more brand marketing. We want to be a little less reliant on buying customers. We want to really just tell our story and get more direct traffic coming to Airbnb.” So we put Hiroki Asai in charge of running all of our marketing. He was at Apple for 18 years. He led marketing and he was there from the launch of the iMac to the launch of the Apple Watch and everything in between.
And so these were the main two leadership expansions or hires that we added to really just get us down the strategy.
Andy Serwer:
Brian, it kind of reminds me, that line from Rahm Emanuel where he said, “Never let a good crisis go to waste.” Right? Was there a little bit of this? That this is actually … maybe opportunity is not the right word, but a case where you could sort of refocus and rethink things and maybe even redirect the company?
Brian Chesky:
I think that when you’re in a crisis, you have a couple of paths forward. And I think a lot of it is the mindset. You can either deal with the crisis as if you’re running a company, “Oh my God, we just lost 80% of our business. Why me?” Or you can say, “How can I take this as a learning to become better?” And for us, I thought to myself, “How can we, number one, conduct ourselves in this crisis so that we’ll be remembered by following principles.” Whether people agree with the principles or not, they believe that there were principles that we used to make decisions. And the second thing is, how do we use this as a jumping off point to say, “Here’s now where we’re going.” That if you’re going to go through a crisis, you’re going to have this moment of introspection, and you’re like, “Well, what do we actually care and stand for?” And I think that’s what we’re trying to do.
I hope that we look back many years later and say that this was a moment the company really got back to its lanes, really, really focused, and it was much better for that. And so that’s what I hope this is. I don’t want to ever seem opportunistic about a crisis, but I think it’s also important that in moments of trying periods that you do more than is expected of you, not less than is expected of you. Not only what’s expected of you, that you kind of lead in the future, you don’t get dragged into the future. And I also think it’s just really important to use these moments to clarify to people, “Here’s what we stand for. Here’s what we’re doing.” And it’s okay if we aren’t doing everything we used to. That’s okay.
Andy Serwer:
Of course, I got to ask you about the IPO, and the New York Times reported that you said at the end of the meeting, “We’re not committing to going public this year, but we’re not ruling it out either.” Can you add anything else to that? And what would it take for you guys to go public? I mean, it’s this weird thing. The economy is questionable, but the markets are robust.
Brian Chesky:
Yeah. In January this year, I came back from the holidays expecting for us to go public this year. And as recent as March we were working on the S1. And then suddenly all of global travel basically comes to a near standstill. We took the document and we didn’t file it. We put it on a shelf. And recently we’ve dusted it off. And we said we’re going to start resuming all the work to be ready to be a public company. But we also don’t want to go public if the world’s not ready for us. And if people are really nervous about travel, if they aren’t really clear about Airbnb, then the market’s not ready. I will say though, that now that we’ve seen initial recovery, our business back to 2019 levels, without spending a dollar on advertising, or very, very few dollars on advertising, that’s a really positive sign. And so we want to be ready as soon as the market’s ready. I think the market probably wants to see this play out a little bit longer.
So that’s why I definitely don’t want to rule out this year. But I don’t want to say this year because the world is just changing so quickly. And I can’t predict what the world looks like in the next few months, just like a few months ago, I couldn’t have possibly predicted what the world looks like today. So the best thing we can do is be ready.
Andy Serwer:
I mean, it is shocking that you’re saying that your numbers are as good now as they were before, basically. Or as they were last year at this time, I mean you’re-
Brian Chesky:
Yeah. They were not as high as they would have been had the pandemic not happened, because we of course were going to grow. But the thing that’s pretty incredible is that we were spending a lot of money on paid advertising. We spent a lot of money on online advertising. And we pulled all that back mostly because we were frankly hemorrhaging a lot of cash. And the business started coming back without us spending all the money on advertising. And that was a very unexpected surprise. I think it fundamentally says something. It says that we are still useful. There is a need. People want to connect with local communities, local people. And they think of Airbnb without us having to advertise, they still remember us.
Andy Serwer:
I mean, is it possible Brian, that like this spring was like one big punch to the P&L?
Brian Chesky:
Yes, it was. It absolutely was. Listen, when we started Airbnb, we started a three-bedroom apartment. The name of the company was called Air Bed and Breakfast because it wasn’t a bed and breakfast. We were literally inflating air beds. The reason I’m telling you that is because nobody thought it was a good idea to give three guys money that had an inflatable mattress company, renting inflatable mattress space. And so because of that, we have learned to be really scrappy. And we have to learn to get a lot done without a lot of money. And it was in our roots.
And then something happened. We got successful, and then we raised billions of dollars. And like every company that gets successful and raises billions of dollars, you start new things because you can, and it gets easier to say yes than it does to say no. And I think that what the crisis did is it made us look back and say we can’t do everything we used to, but that also means that has the benefit of us focusing on what makes us truly special. And I think that, yeah, like suddenly we are so much more focused. And we’ll see. We’ll see where it goes. I do want the business to recover. When it does, I do want to be able to re-hire people that we had to say goodbye to. But we also want to be careful that there could be second waves. So we’re going to play it by ear.
Andy Serwer:
I want to ask you about that. I mean, there have been some frustrations by various constituencies of yours. You mentioned the employees, the layoffs. Some are griping about SOC options obviously. My understanding is you have this expiration. And then, of course, the refund situation, and that also caused some big waves as well. How did you handle that, and have those issues been ameliorated, do you think?
Brian Chesky:
Yeah. Well, those were two of the hardest decisions we’ve ever had to make. I would say, if I look back on the three or four-month period of the crisis, March, April, May, which was probably the peak period, I’m really proud of the decisions we’ve made. And I think we handled almost every decision very, very well.
I do think that the first big decision we made was the refund. And I think we made some pretty big mistakes, and I think it was a big learning experience. I stand by the decision. Let me clarify what the decision was. There were over a billion guest-booked Airbnbs. Suddenly there was a global lockdown and you couldn’t travel. Many countries had restrictions of even getting on airplanes, crossing borders, going to Airbnbs. And then suddenly we had customers asking us for refunds that totaled over a billion dollars. Now this is not our money. This is money we hold in a bank account and we pay the host once you check-in. It’s not our money, it’s not the host’s money. It’s not anyone’s money until the stay happens.
And then we keep around 15% and we pay the host. Suddenly we had to make a decision. Do we refund the money to the guest, or do we not refund the money and give it to a host? And it was a really hard thing because it’s like do you side with the guests or the host? And I didn’t really want to side with either. We decided at the end that our principles, we would side on health and safety. And I felt like the thing at that very moment was we were hearing a lot from guests saying, “I paid for this Airbnb. I need my money back. If I don’t get my money I’m going to feel like I have to travel, but I feel unsafe to travel.” And a lot of people were advising not to travel, and we wanted to generally be generous. So we did the refund. I stand by that decision, but we didn’t consult our hosts well. And it was a big learning lesson. And it was very painful and hosts were very upset.
So then we did our very best to make it right. We didn’t have enough money to make them whole, because we were burning a lot of cash. But we took $250 million of our own money. And at that time, 250 million feels like a lot, because even though you could say, “Well, you could just raise more money.” Well at that point it wasn’t clear we could raise more money. We were burning a lot of cash, and it wasn’t clear investors really want to give a travel company more money right then. So this was a tough situation. But we did, we sent $250 million of our money to hosts. Many of them were really appreciative. Others felt like we should have given even more money. We did the best we could. And ultimately I stand by the decision, but I do feel like the way we did it, we should’ve consulted them. So that was the first one. I don’t know if you want to talk about the layoff at all.
Andy Serwer:
Yeah. Why don’t you elucidate a little bit on that one as well?
Brian Chesky:
Yeah, well the layoff was the … That was probably the hardest decision I’ve ever had to make. And probably the most painful thing I’ve had to do as a company. Our mission is centered around this idea of belonging. So how do you tell nearly 2000 people that they can’t work here anymore? It’s a really hard thing to do. But we came to the decision when we recognized two things. We don’t know when travel is going to recover. And in April we had certainly no idea we’d even have the business we have now. And we did know that when travel did come back it’d look totally different. And so the company was totally different. And that we would not be doing all the things we used to. And so we had to map cuts to a more focused business strategy. And we ended up having to reduce the size of our team by 25%. And we had to disproportionately reduce team sizes in Luxe and Plus and other groups that mapped to things we weren’t doing anymore.
But we wrote down a bunch of principles. We said, “Number one, we don’t want to have to do this twice. So if we’re going to make a layoff, we’d better go deep enough and do it once. Number two, we’re going to map it to our new more focused business strategy. Number three, we’re going to be absolutely as generous as possible. And we don’t want to have regrets that we could have done more. Number four, we’re going to wait to communicate information until we have all the information. But when we do, we’re going to be really transparent about our thought process.” And that’s what we tried to do. And I ended up writing it out, I delivered to the team the message. I wrote a letter that went online. It was basically posted.
And in it I tried to go in real detail about how we came to the decision in what we’re doing for employees. And we try to go above and beyond. We gave, for example, United States, 14 weeks severance, plus a week per year service, one year of healthcare coverage. Everyone got to keep their laptops because you need your laptop to find a new job. And we did something else that was kind of unusual. We dedicated a percentage of our recruiting team to help people being laid off find new jobs. And probably the most effective part we did is we actually created an online directory. So basically everyone that was laid off could opt in to having their like LinkedIn, their profiles online. And within the first week, 300,000 people viewed those profiles, and hopefully quite a lot got new jobs. So that’s what we did, but you can’t feel good about something like that. You can only feel like you did the best you could. And that’s, I think, kind of what happened there.
Andy Serwer:
Yeah. I want to ask you about social and racial justice, the social protest after the killing of George Floyd, your response, and also President Trump’s leadership and your assessment of that. First of all, have you guys done enough at Airbnb? I mean, you made some donations, but do you need to have more diversity at your company? And then secondly, what do you think of the president’s handling of that crisis?
Brian Chesky:
I’m not sure if you were to ask 100 CEOs, “Have you done enough on racial diversity?” if anyone would feel comfortable saying yes. Because I don’t know who has done enough. Airbnb has not done enough. We need to do more. I am proud of the work we’ve done, but I kind of think we’re all living through this history where we’re all reliving the last year, five years, 10 years, and ask, “What if I did more sooner?” Every single one of us is now saying that. And I think there’s a lesson there, that we’re probably five years from now going to say that about this moment now. And so I told our team, I said, “We can choose to be a mirror to society as it is today, a year from now, or five years from now.” And so hopefully the bolder we are. If we’re really bold right now, we’re going to not look bold by history standards, we’re going to look like, “Oh, you just barely did enough.”
And if we do whatever it makes everyone happy now, history will look back on us saying, “You didn’t do enough,” because this stuff doesn’t age. And I mean, I think we’ve done some things that are fairly bold. Like we had discrimination on our platform in 2016. There was a hashtag trending on Twitter. It was #AirbnbWhileBlack, black guests basically saying, “I have trouble getting Airbnbs. I feel like I’m being discriminated against.” So we brought in Eric Holder. I think we were the first company bringing Eric Holder in tech. And he did a report. And we brought in Laura Murphy of the ACLU. And for a couple of years we created an anti-discrimination team when we started working on this issue.
And then I think it was basically a month ago we announced a partnership with Color of Change. Color of Change, I think it’s the first partnership, they’re like the leading online civil rights group in America. And it’s the first partnership done with a tech company where we wanted to measure the systemic bias on the Airbnb platform. And it was very kind of first of its kind that we did. So I’m proud of what we’ve done there. I think internally we need to do more. And we had a little bit of a setback with the layoffs because we disproportionately laid off non-technical people, non-engineers. And so we laid off fewer engineers than non-engineers. Well, engineers, there not many black engineers. And so our diversity was hit by disproportionately laying off non-engineers. And so we have a lot more ground to make.
And we put out some targets. 20% of our board and executive team to be people of color by the end of next year. We want our team to be 50% women, not 48% women. There’s a bunch of things we’ve done. And so yeah, we have a lot more work to do. Yeah. And I hope if we talk again at some point I can tell you about the progress we’ve made.
Andy Serwer:
And finally the last question, just to follow up on this President Trump. You’ve been supporting a Democrat speak with the President Obama sometimes I understand. And just wondering where you think things are headed as we get towards November?
Brian Chesky:
I try not to wade too much into politics. As we’re in 190 countries, here’s my general principle about politics. I’ve chosen with Airbnb to speak out when it comes to issues that have anything to do with our mission, our purpose. So when President Trump got elected, he instituted what I thought was a very bad idea, a travel ban. And Airbnb, we not only spoke out against it, because a travel ban is against what we believe in. We ended up spending $4 million to buy a Superbowl ad to basically speak out against it, which seemed a little bit crazy at the time, but we did it. So I think that anything that’s putting up walls between countries, anything that’s trying to divide people, unless it’s for true health and safety reasons, but just arbitrary reasons are things I don’t agree with.
And I do think if you look at the United States’ response, like the best thing I would recommend people do is just look at 190 countries. We have 190 experiments running simultaneous about how you could handle a crisis like this. I think that coordination is always a good thing. And I think I’m not going to be only one to say there’s really opportunities there. But what do I think is going to happen? Who knows what’s going to happen this fall. But I did read that this is going to be one of the most anticipated elections in our recent history, and hopefully people turn out to vote. And so that’s the main thing I’d say on that one.
Andy Serwer:
All right. Brian Chesky, CEO of Airbnb. Thanks very much for your time.
Brian Chesky:
Thank you very much.
Andy Serwer:
You have been watching Influencers. I’m Andy Serwer. We’ll see you next time.
