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 going to hear from Brian Chesky, the CEO and co-founder of Airbnb. Back in 2016, we spoke with Brian's co-founder, Joe Gettia, 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 25% of the company was going to 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 strangers will live with each other, live with each other. That was the hardest thing we were ever going to do. It was like pushing a rock up the hill. And it turned out that trying to run a company that does travel, preparing to go public in the middle of the pandemic, that is hard.
And then doing it all via Zoom, it was even more difficult. And I think that what people want right now, just 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-founder, Joe and Nate.
We talk all the time. And when you're going through crazy periods of time, it has a way of bringing new culture together. It also has a way of making your bubble a little bit smaller. And that's probably what's happened for me.
Yeah. You wrote a letter to your employees that was posted publicly. And that letter is 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 for how you had to make that hard decision.
But also that every employee would receive 14 weeks of pay plus severance and insurance for a year. And they could keep their laptops. And there were resources to help the employees. Kind of walk me through how you came to write that letter and how you kind of dealt with that just emotionally.
Yeah. 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 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 we lost 80% of business in eight weeks. You know, we're like one of the success stories, right? And suddenly, eight weeks, there's, you know, all sorts of concerns. There's articles.
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 spent.
Then we quickly raised $2 billion. It's not easy to raise $2 billion. It's more difficult to raise $2 billion from your 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. We had to do that deal, and that was, like, over the course of 72 hours to, like, get that deal done. It was the fastest deal, I think, by someone I've ever done, and they've ever done.
So before that layoff even happened, I wrote a couple principles. And I said, you 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 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 going to be the kind of company that would 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 $2 billion. 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 that shape of our business and what we focused on. And so then we just realized that we had to approach this with 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 reference plus a week per year 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 everything 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 do a 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 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 kind of like, 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 trouble showing heart. And so I use the word like love in a letter to a layoff. And it's kind of something very few people do.
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, 1,900 employees had to be laid off.
But you still have a large workforce. How are you making sure that you're keeping morale on the people who are still working at Airbnb? 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 a layoff.
And 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 kind of Q&A. I said, no matter what question you ask, I have this iMac. It's got this, you know, with the camera that has this little green light next to it.
I'm going to stare into that green light every week. And I'll 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 the line of hope. But there are a lot of reasons to be optimistic.
And when I was a kid, my dad used to say to me, things are never as good as they seem, as bad as they seem. Well, that's true. Things weren't nearly 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. And 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 is essential is the relationship that we have with people.
That's what we have at the end of the day. Let's talk about the travel industry, Brian. 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, a lot of troughs of sorrow.
Originally, you and your partner sent out 20 emails to investors to invest, and not a single one invested in your company. You had several setbacks trying to stand up Airbnb in 2008, 2009. At one point, you made cereal, a box of cereal, to get attention. And I think you raised $20,000 with the sale of those cereal boxes.
Yeah, like $20,000 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-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 literally hot-glowing these cereal boxes in our kitchen. I remember wondering, I wonder if Mark Zuckerberg ever had to hot-glow cereal boxes in his kitchen to start Facebook. Of course, the answer was not.
This wasn't on the sign, but we lived through it. So, I mean, clearly, there were times 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 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 going to be decisive. It felt like if I was the captain of a ship, it felt like suddenly something hit the side of the ship and got to move very, very quickly. And so it was all hands on deck. First thing is we had customers cancel over $1 billion of reservations.
Now, this would already have been hard, except the fact that this was $1 billion that our hosts were expecting, and these people, many of them depend on to pay their rent or mortgage. Then we had a huge predicament. What do you do when people want $1 billion of refunds? And another group of people tell you, well, if we don't get that $1 billion, 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, but we just hold the money. What we decided to do is we refunded all stays related to the pandemic, where people need a cancellation if they can travel. But then this caused a huge shortfall of their hosts, and we're bleeding cash at this point.
And never in our history have we bled cash. In fact, we had more money in the bank, and we raised it before the pandemic. Suddenly, we're losing a lot of money. We took a quarter of a billion dollars to $50 million, and we sent it to our hosts.
Just didn't loan it, just sent it to hosts. They wouldn't need it even more, but it was the most we could do. Then our employees rose up. They offered up to $1 million of their own money through things like perks and travel credits to give to our hosts.
And Jonah and I said, well, let's add zero to that. We got that to $10 million. We created a little special grant program. Then suddenly, we noticed that there were nurses, EMTs, and doctors, and they were going to 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. You know, suddenly, the last thing I'll say is the following. Our business drops by 80% in eight 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 a car. They were driving to a remote destination within about 200 miles and staying at 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 that home on Airbnb. So it's a totally different world.
And I think, I mean, 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 person 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. 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 80% drop in business.
But CEO Brian Chesky says that people are traveling again. They're just not getting on planes, and they're staying much closer to home. 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 instead of the same landmarks, to put it on Instagram and 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 in 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 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. That's the kind of travel 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. I mean, yeah. I mean, are you seeing, I mean, we're seeing a world where, you know, it's impossible to get an RV.
We are totally hooked out for these. And so is there sort of a future scenario where Airbnb more aggressively gets into the business of RVs? Oh, yeah. A hundred percent.
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, largest RV rental companies in the world. As far as they're not RVs, it's a community.
But yeah, I'm sure thousands and thousands of RVs. We have thousands of treehouses, thousands of airstreams, thousands of yards, thousands of houseboats. And I think that people are discovering unique one of a kind. They want things that are more intimate, more local.
And one of the cool things about Airbnb is, like, the most insane space that you ever imagined, 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 a blanket 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-foot high boot. There is a dog that you sleep in.
It's called the Dog Bark Park B&B. It's like a 20-foot high dog. And it's a B&B, I think, in Idaho. And it's got a waiting list now.
Yeah. I mean, look, all of these examples are awesome and exciting. 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 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 1,000 hosts have already updated the speed of their Wi-Fi on their Airbnbs. We want to get hundreds of 1,000 hosts just to update what kind of internet do you have, what's the speed of your Wi-Fi, what's the buffering rate. Because some people, like, they have work where they need to rely on it.
And then we're going to ask, like, in reviews to confirm, like, 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? 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 presumably your business is still significantly lower this year, this time, this year, than it was last year. No, it's not. It's not? It's not in between.
Not significantly. Wow. So you're already seeing sort of similar numbers right now than you were last year? Yeah.
So it dropped by about 80%. And, I mean, you know, nobody knows if this is pent-up demand or not. But, no, we're around last year's levels. All around the world?
Averaged out. You know, Latin America and Asia are lower. North America and Europe are higher. Wow.
And that's because people aren't getting on planes? Mischief 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 is less likely to 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 governments to have reopening protocols.
We hired or brought on the foreign version of the United States with that 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 about that from our listeners. I mean, in terms of cleanliness, how do you ensure that the hosts are keeping their properties clean?
This is a question from Mary Elliot Coglin-Naur via Facebook. How do you guys make sure that the hosts 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.
We asked the hosts to go through basically like an online course. So they go through the course. It's got like basic cleaning protocols. They get a badge or seal on their listing.
You'll see it. And it says right below listing. I think it's Enhanced Cleaning Protocol. We created gaps between checkouts and check-ins of about 24 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 updating review systems. So when people stay, they can rate the cleanliness and do the hosting very responsive. And then we're going to be working on ways to essentially verify the standard of cleanliness.
Wow, that's a little bit harder problem. But there's a whole system that we're working on. You know, to this point of going public, I mean, is that on the back burner now of taking the company public? No, 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 S1, and it's like a 300-page-turner. It will not compete with your favorite American literature as a Sunday night reading. But we're going to file it late March. We put it on the shelf.
And recently we've been dusting it off, you know, and you have 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. there brian um you know when you think about where your business is going to 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 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'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 like whatever i was afraid of i think 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 probably feel alone i bet you everyone's less alone they think they are but we're actually everything's connected we're all connected if you kind of lean on 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 kind of follow your your own heart your own intuition you know before a pandemic everything was stretched in we were sprawling we're going to all these businesses you know just kind of feeling pressure trying to make everyone happy and the pressure of trying to do everything 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 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 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 we're all needs and we need to focus on that that's what i'm taking out of this yes indeed brian chesky thank you so much for joining us thank you very much 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 npr presents.org this episode was produced by candace limb 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