How I Built Resilience: Brian Chesky of Airbnb

This has been by far for us the most difficult thing that we've experienced since we started the company a dozen years ago. And I think Joe and I used to talk about how starting Airbnb, basically this idea that strangers would live with each other, like that was the hardest thing we were ever going to do. It was like pushing a rock up a hill. And it turned out that trying to run a company that does travel, preparing to go public in the middle of pandemic, is about as hard. And then doing it all via Zoom, it was even more difficult. And I think that what people want right now, more fundamentally, is connection. Isn't that the thing that we've always wanted? We want connection to each other. And now you have to fight for it. You have to make a conscious effort for it. On the one hand, I'm closer to some people than I've ever been in my life. I'm probably closer to my co-founders Joe and I. We talk all the time and when you're going through crazy periods of time, it has a way of bringing you closer together. But it also has a way of making your bubble a little bit smaller. And that's probably what's happened for me.

There is no playbook, I don't think, to lay people off and that's the kind of thing that if there was a playbook, you should never use it. Because the thing that people want more than anything is they want humanity. They want compassion. And that means that you need to treat people like people, individually and not robotically. You know, when the crisis happened, we felt it in mid-March. It was pretty serious. We spent 12 years building Airbnb and then we lost 80% of the business in 8 weeks. It's like we're one of the success stories, right? And then suddenly, 8 weeks, there's all sorts of concerns. There's articles, will Airbnb survive? I never thought I'd read an article like that. And we made a lot of hard decisions. We first cut enormous amount of cost. We cut over a billion dollars of planned marketing spend. Then we quickly raised two billion dollars. It's not easy to raise two billion dollars. It's more difficult to raise two billion dollars when you're a travel company, it's a pandemic, and you've lost 80% of your business in like eight weeks. The people get nervous. Thankfully, we had some great investors step up. But we had to do that deal, and that was over the course of 72 hours to get that deal done. It was the fastest deal I think I've ever done and they've ever done. So, before that layoff even happened, I wrote a couple principles, and I said we know we have a handful of stakeholders. We have to first make sure that we act quickly and with all stakeholders in mind. We're going to be remembered probably for how we handled this crisis. Andy Grove, this famous entrepreneur, said, "Bad companies are destroyed by a crisis. Good companies survive a crisis, and great companies thrive or are defined by a crisis." I said we're not going to be the kind of company to be destroyed by this. So, we're going to obviously try to take care of each of our stakeholders. And when we got to the employees, we basically had exhausted options having raised two billion dollars, we came to the conclusion that we would have to do layoff when we confronted two hard truths. The hard truth number one was this, that we did not know when travel would return. Nobody did. And the second thing we knew is that when travel would return, it would look fundamentally different than the travel before the pandemic. And so, our business would have to look different, and we'd have to change the shape of our business and what we focused on.

And so then, we just realized that we had to approach this with a sense of humanity. I said we should be as generous as we possibly could be, and not less generous than that. Why would you do that? And so, we came up with a handful of things that we did to try to help people in this very difficult time. We did a 14-week severance plus a week per year of service. We felt like, well, this is a health crisis. People need health insurance. And so, we made sure that everyone had at least 1 year of health insurance even after they were getting laid off. One of the things that I'm most proud of that our team came up with, Joe and the team came to me and they said, you know what? We have a recruiting team. Maybe we could dedicate a percentage of the recruiting team to find job outplacement for the people being laid off. Maybe we could basically be an outplacement team to help them find jobs. And the last thing I'll say is writing the letter, I just really wanted to make sure I was brutally honest with them. But I also, a lot of times the problem with these things is there's a certain way to act. And the certain way to act is a way where you're not vulnerable, you don't take too much responsibility. And I was like, you know, the one thing people want to know is that leaders have compassion because at this period of time if leaders don't have compassion, then we are all in a very precarious situation. And compassion means actually having heart. I actually think business leaders do have heart. It's just that they sometimes have trouble showing heart. And so, I used a word like love in a letter with a layoff and it's kind of something very few people do. But I don't think it's something very few people feel. It's just that the conventions of business get really cold. But now I think it's pretty obvious that people do want to feel something.

Oh, it's so hard. I was warned ahead of time that not only is a layoff going to be difficult, but the months after layoff, when you can't even gather people, that gets even more difficult. One of the things I've done is for the last 5 months, I do a weekly Q&A. I said, no matter what question you ask, I have a iMac and it's got this camera, there's a green light next to it and I'm going to stare into that green light every week and I'm going to just tell you everything that I can and that's going to be our point of connection. I tell people, you're not alone. We're going to go on this together and I think that the key is you have to be optimistic and optimism is not blind hope. But there are a lot of reasons to be optimistic. You know, when I was a kid, my dad used to say to me, things are never as good as they seem and as bad as they seem. Well, if that's true, if things weren't maybe as good as they seemed in January, but that also probably means things aren't as bad as they seem here in July. I'm seeing the humanity of people, the love that's come through the surface. I mean, you suddenly now in a crisis are reminded of some of the things that are most essential and those things that are most essential are not the things that come in cardboard boxes to our front door. That the essential is the relationships that we have with people. That's what we have at the end of the day.

Yeah, like 20 or 30,000. It was something like that. Joe told the story, we had to raise collectible breakfast cereal. We were air bed and breakfast. So we said, well, let's do collectible breakfast cereal for the Democratic and Republican National Conventions in 2008. Joe and I, we made these Obama O's, they were Cheerios, and Captain McCain's, a maverick in every bite. And at one point, we're like literally hot gluing these cereal boxes in our kitchen. I remember wondering, I wonder if Mark Zuckerberg ever had to hot glue cereal boxes in his kitchen to start Facebook. Of course, the answer was not. This was an ominous sign, but we lived through it.

When the pandemic hit, we said, "We are going to be decisive." Felt like if I was a captain of a ship, it felt like suddenly something hit the side of the ship. And you had to move very, very quickly. And so, it was kind of all hands on deck. First thing is we had customers cancel over $1 billion of reservations. Now, this would already have been hard except for the fact that this was a billion dollars that our hosts were expecting. And these people, many of them depend on it to pay the rent or mortgage. And we had a huge predicament. What do you do when a billion people want a billion dollars of refunds and another group of people tell you, "Well, if you don't get that billion dollars, then we're going to be in a really bad spot." Well, that's a really bad no-win situation. It's not our money. We just hold the money. What we decided to do is we refunded all stays related to the pandemic where people needed cancellation because they couldn't travel. But then this caused us a huge shortfall with our hosts and we're bleeding cash at this point. I have never in our history have we bled cash. In fact, we had more money in the bank than we raised before the pandemic. Suddenly, we're losing a lot of money. We took a quarter of a billion dollars, $250 million, and we sent it to our hosts. Just didn't loan it, just sent it to hosts. They would have needed even more, but it was the most we could do. Then our employees rose up. They offered up to a million dollars of their own money through things like perks and travel credits to give to our hosts. And Joe and I said, "Well, let's add a zero to that." We got that to 10 million dollars and we created a little special grant program. Then suddenly, we noticed that there were nurses, EMTs, and doctors, and they were going into hot zones and needed places to stay. Hosts were telling us, "Hey, we can host these people." And we created this program called Frontline Stays to provide housing for frontline workers.

We had more than 100,000 hosts list their homes for a discount. We waived fees. Some of the homes were free. So, we've been trying to be adaptable. The last thing I'll say is the following. Our business drops by 80% in 8 weeks, and we thought, "Well, this is going to be a really, really long road." And it is. But something remarkable happened. Businesses started seeing glimmers of hope and recovery. And what ended up happening is people weren't getting on planes, they weren't crossing borders, and they weren't traveling for business. But you know what they were doing? They were saying, "I need to get out of the house." And they were getting in a car, they were driving to a remote destination within about 200 miles and staying in an Airbnb. And so, we've seen a major surge in bookings in non-urban areas, small towns, rural communities, people staying longer, people saying, "If I'm going to work from home, why not just work from any home?" And they get a home on Airbnb. So, it's a totally different world, and I think the maybe the most fundamental change that I see in our world that's going to happen, if you're so fortunate enough, typically upper middle class or upper class, not everyone can do this, but for those who can, they're realizing maybe I'll go a month here, maybe I'll go a month there. And you're seeing not only population redistribution, but you're also seeing travel redistribution. That all these new communities are really welcoming guests, and they're going to welcome them for a longer period of time. That is a fundamental change in our industry.

People are going to instead of traveling to the same 20 cities, going to the same hotel districts that are really crowded, and then standing in line to get their selfie photo in front of the same landmarks to put it on Instagram say look I got that too. They're going to have to make some different choices and maybe those won't be so bad after all. What they're going to do is they're going to travel outdoors. For example, there's 400 national parks in the United States. Most Americans live within a tank of gas of a national park. And national parks have historically not been the main way people travel. They go to Miami, they go to Vegas, they go to Times Square. Well, I think that if this is a time of reconnection, maybe this is a time of reconnection to family. This is also could be a time of reconnection with nature and the outdoors for a lot of people. I mean, where are we seeing huge growth? Cabins, Airstreams, camping. This is the kind of travel that you're going to see. I think this is going to just change trends. I think people are going to want to reconnect to nature. This is a big change.

Totally. We are totally booked out for these. Oh, yeah. 100%. I mean, I don't even know how many thousands of RVs are on Airbnb right now. I'm going to have to look, but we're probably without having intended to be in that business, we're probably one of the largest RV rental companies in the world as far as they're not our RVs, it's the communities, but I'm sure thousands and thousands of RVs. We have thousands of tree houses, thousands of Airstreams, thousands of yurts, thousands of houseboats. And I think that people are discovering unique one-of-a-kind. They want things that are a little more intimate, more local. And one of the cool things about Airbnb is like the most insane space that you ever imagine, these A-frame homes or these really interesting architectural gems. They're saying, "I want to go somewhere with an interesting home. This home is in the middle of blank and it's really cool-looking." And so, you're starting to see some really interesting homes in Airbnb being booked. There is a giant boot that you can sleep in in New Zealand. Somebody built a giant boot. It's like a 15-ft high boot. There is a dog that you sleep in. It's called the Dog Bark Park B&B. It's like a 20-ft high dog and it's a B&B in Idaho and it's got a waiting list now.

I love that. We have not done it yet, but I love the idea. I feel like this is a good sign that we should do it. One of the things we now do is, for example, your internet speed never mattered more in your life than it does right now, right? One of the things is making sure that people know the Wi-Fi speed. So, over a thousand hosts have already updated the speed of their Wi-Fi on their Airbnbs. We want to get hundreds of thousands of hosts just to update what kind of internet do you have? What's the speed of your Wi-Fi? What's the buffering rate? Just because some people have work where they need to rely on it. And then we're going to ask in reviews to confirm Wi-Fi speed. So, really basic things like that, which you kind of took for granted before we asked, "Do you have Wi-Fi?" Now it's like, "Well, how fast is the Wi-Fi?" because it really matters to people.

No, it's not. No, it's

Not significantly now.

Yeah. So, it dropped by about 80% and I mean, you know, nobody knows if this is pent-up demand or not, but we're around last year's levels.

Or averaged out, you know, Latin America and Asia are lower. North America and Europe are higher.

Makeshift from hotels to homes. I mean, if you're in a city and you want to go out of the city to a small community, the smaller the community, less likely they have a hotel because a hotel only works with density, right? You need a bunch of rooms, you need efficiency. And so, people are basically traveling and going to small communities. Well, it turns out that's actually a really good use case for a home. And we try to be very responsible. We work with local governments to have reopening protocols. We hired or brought on the former surgeon general of the United States, Vivek Murthy, to create a cleaning protocol. And I mean, people don't want to be in crowds, and they perceive Airbnbs as a safer option.

Yeah, so this is the whole program that we're doing. We launched this thing called the enhanced cleaning protocol. We ask hosts to go through basically an online course. If they go through the course, it's got basic cleaning protocols. They get a badge or a seal on their listing. You'll see it, and it says right below the listing, I think it says enhanced cleaning protocol. We've created gaps between checkouts and check-ins of about 24 hours to make sure that, obviously, there's some gap and people aren't interfacing with each other. These are some of the things, and now we're working on other things like updating the review system. So, when people stay, they can rate the cleanliness and the host seem very responsive. And then we're going to be working on ways to essentially verify the standard of cleanliness as well. That's a little bit harder problem. But there's a whole system that we're working on.

No, I've when this interview is over, I will be resuming work on that. To go public, you've got to write this securities document called an S-1, and it's like a 300-page page-turner. It will not compete with your favorite American literature as a sunny night reading. But we were going to file it late March. We put it on the shelf, and recently we've been dusting it off, you know, and getting to update it because the business has changed. So, you've got to kind of write it more differently. So, that's what I'm doing, and we don't know when we'll be public, but I basically said, "We'll be ready this year if the market's ready for us. If the market's not ready, we'll be ready when they are."

You know, you can learn a lot about somebody in a crisis, and I've learned two things about myself. First thing I've learned about myself is I can handle a lot more pain than I thought I could. It just turns out that whatever I was afraid of, I think, and this is true for so many of us, whatever happens, I think we can get through it because we're generally not alone. I think sometimes people listening, they probably feel alone. I bet you everyone's less alone than they think they are, but we're actually together, everything's connected. We're all connected. If you lean on the support of those around you, you can handle so much more than you think you do. I mean, most people listening do have connections, and we just need to remind ourselves of them and reach out to them. And the second thing I've learned is to follow your own heart, your own intuition. You know, before pandemic, everything was stretched thin. We were sprawling. We're going into all these businesses, just feeling pressure of trying to make everyone happy. And the pressure of trying to do everything and trying to make everyone happy kind of makes everyone not really happy at all. And then suddenly something happens. You're in a crisis and you can no longer make what I call business decisions. So then you shift to something else. And that's what I call principle-based decisions. If you can't predict where the world's going, just write out the principles of what you stand for and have faith knowing if you do the right thing that it's going to sort itself out. And by the way, what's your alternative at this point anyway? And so I started realizing that we need to get back to the basics. We need to get back to roots, back to what is truly special about Airbnb, which is connecting people. It's about belonging because we didn't start this company to be a travel company. We didn't start this company to be a real estate company. It was about connection. And if it took a crisis for us to get back to that core truth, then that's what we're going to focus on. We're not alone and we all have something the world needs and we need to focus on that. That's what I'm going to take out of this.

Thank you very much.