Transcript

How I Built Resilience: Brian Chesky of Airbnb

Hey everyone, and welcome to How I Built This Resilience Edition. On these episodes, we're talking with entrepreneurs and business leaders about how they're adapting to these difficult economic times. And on today's show, we're gonna hear from Brian Chesky, the CEO and co-founder of Airbnb. Back in 2016, we spoke with Brian's co-founder, Joe Gebia, and he told the amazing story of how they founded and built the company, and if you haven't heard it, be sure to check it out. Now, of course, we are in a very different time. And a few months ago, Brian wrote a letter to the entire staff of Airbnb. Letting them know. That twenty five percent of the company

was gonna be laid off. 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 like strangers would live each other Live with each other. Like that was the hardest thing we were ever gonna 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 uh and then doing it all via Zoom. Uh it was even more difficult.

And I think that what people want right now Um just m more fundamentally is connection. Isn't that like the thing that we've always wanted? We want connection to each other. And And now you have to fight for it.

You know, you have to make a conscious effort for it. You know, on the one hand, I'm closer to some people than I've ever been in my life. You know, probably closer to my co founders, Joe and Nate. 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. Yeah.

You um You wrote a letter to your employees that is posted publicly and that um letter is was remarkable. It was so transparent. You had to lay off a quarter of your employees

In May and you could see how painful it was for you to write that letter. It was Extremely transparent. You described the process um for how you had to make that hard decision. Um, but also, you know, that every employee would receive fourteen weeks of of pay plus severance and

insurance for a year and they they get to keep their laptops and there were resources to help the employees. Um Kinda walk me through um how you how you came to to write that letter and um How you kinda dealt with that Just emotionally.

Yeah, um 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. They want humanity. They want compassion. And that means that you need to treat people like like people, like individually and not robotically. You know, when the when the crisis happened. We felt it in mid march.

It was Pretty serious. We spent twelve years building Airbnb and then we lost eighty percent of the business in eight weeks. It you know, we're like one of the success stories, right? And then suddenly Eight weeks.

There's You know, all sorts of Concerns, there's articles. Will Earbie 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 plan 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 eighty percent of your business in like eight weeks. The people get nervous. Thankfully, um we had some great investors step up. Um, but we had to do that deal and that was like over the course of seventy two hours to like get that deal done. It was the fastest deal I think I've certainly I've ever done and they've ever done. So before that layoff even happened,

I wrote a couple principles. And I said I we um we have a hunt handful of stakeholders. We have to first make sure That we act quickly. And with all stakeholders in mind.

We're gonna be remembered probably for how we handle this crisis. Andy Grove, this famous entrepreneur, said bad companies destroyed by a crisis. good companies survive a crisis and great companies thrive or are defined by a crisis. I said we're not gonna be the kind of company to be destroyed by this. So we're gonna obviously try to take care of each of our stair stakeholders. And when we got to the employees.

We basically had exhausted options having raised two billion dollars. Yeah, 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 trouble 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 have change the shape of our business and what we focused on. And so then We just realize that we had to approach this with a sense of humanity.

I said it we should be You know, 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 fourteen week severance, plus a week prior service. We felt like well, this is a health crisis, people need health insurance, and so we made sure that everyone had at least One year of health insurance, even after they were getting laid off. Um, one of the things that I'm most proud of that our team came up with.

Um, 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 do 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

I just really wanted to make sure. I was just brutally honest with them. But I also like, you know, a lot of times The problem with these things is there's a certain way to act.

and a certain way to act. is a way where you kinda like you were you're not vulnerable. You know, 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 h trouble showing heart. And so I used a word like love. in a letter with to to 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. I mean nineteen hundred employees had to be laid off, but you still have a a large workforce. How are you making sure that you're keeping morale among the people who who are still working in Airbnb. Oh, it's so hard. I was warned ahead of time that not only is the layoff gonna be difficult, but the month after a layoff.

when you can't even gather people. That gets even more difficult. One of the things I've done is for the last five months. I do a weekly like kind of Q and A. I said no matter what question you ask, I have this iMac and it's got like this, you know, what the camera got is this little green light next to it and it's not gonna stare.

Into that green light every week. I'm gonna just tell you everything that I can. And that's gonna be our point of connection. I tell people You're not alone. We're gonna 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, 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 were 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 that essential is the relationships that we have with people.

That's what we have at the end of the day. Um let's talk about the travel industry, Brian, and let's talk optimism for a moment. You know When we told the Airbnb story on the show You had a lot of moments of despair, um, a lot of troughs of sorrow. Um you and your partner sent out twenty emails to investors um to invest and not a single one um invest in your company

Um you've had several setbacks trying to stand up Airbnb in two thousand eight, two thousand nine. At one point you made cereal a a box of cereal to get attention. Um And I think you raised twenty thousand dollars with the sale of those cereal boxes. Yeah, like twenty or thirty thousand. It was um yeah, something like that. Joe told the story. We had to raise Collectible breakfast, you were air, bed and breakfast. So we said well let's do collectible breakfast seal for the Democratic Republican national conventions in two thousand eight. 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 glowing these cereal boxes in our kitchen. I remember wondering I wonder if Mark Zuckerberg ever had to like hot glue cereal boxes in his kitchen to start Facebook. Course the answer was not. This was an ominous sign, but kinda we live through it. So I mean clearly there were times in in in the founding of this company where you were Really coming up with different creative ideas and trying different things out to see what worked.

what's that version of the of the cereal box now? What are some of the things that you are doing as a business to get creative and to think about Building resilience. When the pandemic hit, we said We are gonna 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 kinda all hands on deck. First thing is we had over we had customers. cancel over one billion dollars 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 uh people want a billion dollars or refunds? And another group group of people tell you, Well, if we don't get that billion dollars, then we're gonna be in a really bad spot. Well, that's a really bad no win situation. It's not our money, we we just hold the money. What we decided to do is

We refunded all stays related to the pandemic, um where people needed cancellation because they can travel, but then this caught us a huge shortfall with our hosts. And we're bleeding cash at this point. Like and have never in our history have we bled cash. In fact, we 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, two hundred fifty million dollars.

And we sent it to our host. Just didn't loan it, just Sent it to host. You know, 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 like things like perks and travel credits.

To give to our host. And Jonah and I said, Well let's add a zero to that. We got that$10 million 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 needing places to stay. Hosts are telling us, hey. We can host these people, and we car created this program called Frontline Stays to provide housing for frontline workers. We had more than a hundred thousand hosts.

List their homes. For a discount, we waive fees. Some of the homes are free. So we've been trying to be adaptable. You know, suddenly the last thing I'll say is the following. Our business drops by uh eighty percent in eight weeks.

And we thought well this is gonna 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 two hundred 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 gonna work from home Why not just work from any home? Right. And they get that at home on Airbnb. So it's a totally different world than I think. I mean the maybe the most fundamental change that I see in our world that's gonna happen.

If you're so fortunate enough, typically upper middle class person or upper class. Uh 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 um they're gonna welcome them for a longer period of time. That is a fundamental change in our industry. When we come back in just a moment, Brian tells us more about the travel trends we might start seeing this fall. And how Airbnb will try to respond to them.

Stay with us. I'm Guy Raz, and you're listening to How I Built This Resilience Edition. From NPR. Hey, welcome back to how I built this resilience edition. Earlier this year, Airbnb experienced an eighty percent drop in business.

But CEO Brian Cheske says that people are traveling again. They're just not getting on planes and they're stay much closer to home. People are gonna instead of traveling To the t same twenty cities. Going to same hotel districts that are really crowded.

And then standing in line. to get their selfie photo instead of seeing landmarks to put it on Instagram say, look, I got that too. They're gonna have to make some different choices, and maybe those won't be so bad after all. What they're gonna do is they're gonna travel outdoors. For example, there's four hundred 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, you know, they go to Times Square. Well I think that if this is a time of Re connection. You know, maybe this is a time reconnection to family. This also could be a time of reconnection with nature and the outdoors for a lot of people. I mm where we seeing huge growth.

Cabins. Airstreams. Camping. This is that's the kind of travel that you're gonna see. I think this is gonna just change trends. I think people are gonna want to kinda reconnect to nature, this is a big change. I mean yeah, I mean, are you seeing I mean, we're seeing a world where, you know, it's impossible to get an R V. Totally. We are totally hooked out for these. And and so is there sort of a a future scenario where Airbnb

more aggressively gets into the business of R Vs. Oh yeah. Oh, a hundred percent. I mean I don't even know how many thousands of R Vs are on Airbnb right now. I'm gonna have to look. But we're probably without having intended to be in that business, we're probably one of the largest the largest R V rental companies in the world as far as they're not our R Vs, it's the communities. But yeah, I'm sure

Thousands and thousands of our vs. We have thousands of tree houses. Thousands of airstreams. Thousands of years. Thousands of house boats. 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 like 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 they're There is a giant boot that you can sleep in in New Zealand. Somebody built a giant boot. It's like a 15 foot high boot. There is a dog. That you sleep in. It's called the dog bark.

Park B and B. It's like a twenty foot high dog, and it's a B and B and I think in Idaho and it's Got a waiting list now. Yeah. I mean, look, all of these um examples are awesome and and exciting. Um, this is a question, I love this question from Jip Yee. Um, have you guys considered having a category of like houses suitable for work from home or quarantined homes, like a like a little category for those things? 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, we your internet speed never matter mattered more in your life than it does right now, right? Like 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, um, what's the buffering rate, just cause some people like they have work where they need to rely on it and then we're gonna ask like in reviews to confirm like Wi Fi speed. So really basic things like that, which you kinda 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. I have to assume like with the hotel industry and the travel industry a significant part of your business does come from business travelers, right? And and presumably your business is still significantly lower this year. this time this year than it was last year. It's not. Not significantly no. Not significantly, wow.

So you you're seeing you're already seeing sort of similar numbers right now than you were last year. Yeah. So it dropped by about eighty percent. And I mean, you know, nobody knows if this is pent up demand or not, but no, we're we're around last year's levels. All around the world? Or uh averaged out, you know, Latin America In Asia are lower. North America and Europe are higher. Wow. And that's because people aren't getting on planes.

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 Search General United States, Vivek Murphy, to create a cleaning protocol. And then people don't want to be in crowds and they perceive Airbnb as a safer option.

Yeah, we're getting questions um about that from from our our listeners. I mean in terms of cleanliness, how do you how do you ensure that that the hosts are are keeping Um their their property's clean. This is a question from Mary Elliott Cog Cogn Nauer um via Facebook. How do you guys make sure that the hosts are are really sanitizing their homes. Yeah, so this is the whole program that we're doing. We launched this thing called the Enhanced Cleaning Protocol. And we ask. host to go through basically like an online course that they go through the course.

Um it's got like 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 check outs and check ins of about twenty four hours to make sure that

Obviously there's some gap and people aren't kind of interfacing with each other. These are some of the things and now we're working on other things like um updating review system so when people stay they can rate the cleanness and did the host seem very responsive. And then we're gonna be working on ways to essentially verify the standard of cleanness as well. That's a little bit harder problem. But there's a whole system that we're working on.

You know, to this point of of going public, I mean Is that on the back burner now of of taking the cum company public? No, I've uh When this interview's over, I will be Resuming work on that. Um, to go public you've gotta write this securities document called an S one and it's like

A three hundred page. uh Page Turner. Um it it it's it's it it will it will not it will not compete with your favorite American literature as a sunny night reading. But um We were we're gonna file it late March. we put on the shelf and uh recently we've been dusting it off, you know, and And you have to update it'cause the business has changed. So you've got to gotta kinda write it more diff 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. Um if the market's not ready, we'll be ready when they are.

Brian, um You know, when you think about where your business is gonna be in five years and And what you've learned from this time, you know, as a leader It's been really difficult. It's been extremely challenging. You're you're you're sort of wearing your vulnerability on your sleeve, which I think a lot of people appreciate. What do you want to take with you into the future in five years' time from now that you've really learned about yourself and your leadership and your company?

During this time period. You know, um You can learn a lot about somebody in a crisis. And I 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 like 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 we're generally not alone. I think sometimes people listening they probably feel alone. I bet you everyone's less alone they think they are that but we're actually together everything's connected, we're all connected.

If you kinda 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 they we just need to remind ourselves of them and reach out to them. And the second thing I've learned Esto.

kind of follow your your own heart, your own intuition. You know, before a pandemic. Airbnb was stretched thin. We were sprawling. We're going into all these businesses.

You know, just kind of 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 w 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 gonna sort itself out. And by the way, what all what's your alternative at this point anyway?

And so I started realizing that like 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. But about belonging. 'Cause we didn't start this company to be a travel company. We didn't start as a 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 gonna 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 gonna take out of this. Yes, indeed. Brian Cheski, thank you so much.

For joining us. That's an excerpt from my conversation with Brian Chesky, CEO and co-founder of Airbnb. To see our full interview, you can go to facebook.com slash how I built this, and if you want to see all of our past live interviews, you can find them there or at youtube.com slash NPR. If you want to find out more about the How I Built This Resilience series or other virtual NPR events, you can go to nprpresents.org. This episode was produced by Candace Lim with help from Will Mitchell, Tyra Lockhart, Matt Adams, Gianna Capadona, John Isabella, Julia Carney, Neva Grant, and Jeff Rogers.

Thanks for listening, stay safe, and I'll see you in a few days. I'm Guy Roz, and you've been listening to how I built this.