Airbnb CEO on Traveling During COVID-19 with Guy Raz | How I Built This | NPR

TL;DR

Airbnb responded to an 80 percent booking decline by cutting planned marketing spending, raising two billion dollars, reshaping its business, and laying off about 25 percent of its workforce. Brian Chesky says crisis leadership requires quick action, honest communication, compassion, generosity, and decisions tied to how travel may fundamentally change.

Transcript

hello and welcome to how i built this resilience edition from npr happy friday i hope you are all well um this is where we talk about how businesses are building resilience during this challenging time and in the window next to me is brian chesky's the co-founder and the ceo of airbnb um we told the story of airbnb on the podcast back in 2016. it's... Read More

Key Insights

• Airbnb lost 80 percent of its business in eight weeks after the pandemic disrupted travel, turning preparations for becoming a public company into the most difficult period the founders had faced since starting the business twelve years earlier.
• Airbnb cut more than a billion dollars in planned marketing spending and raised two billion dollars from investors, with the financing arranged over about 72 hours despite investor concerns about funding a travel company during a pandemic.
• The decision to reduce staff followed two conclusions: Airbnb did not know when travel would return, and management believed that travel would look fundamentally different when it did return, requiring a corresponding change in the company's shape and priorities.
• Airbnb laid off about 1,900 employees, approximately 25 percent of its workforce, after management concluded that cost reductions and newly raised financing could not eliminate the need to restructure the business for an uncertain travel market.
• The layoff support included 14 weeks of severance, an additional week for each year of service, at least one year of health insurance, continued possession of company laptops, and dedicated assistance for finding new employment.
• Airbnb converted part of its recruiting function into an outplacement resource and published profiles of participating former employees for recruiters. Those profiles received half a million visits, creating potential connections between departing staff and employers.
• Compassionate crisis leadership requires treating employees as individuals rather than following a robotic playbook, according to Chesky. His layoff principles included acting quickly, considering all stakeholders, protecting diversity and belonging, communicating honestly, and being as generous as possible.
• Weekly question-and-answer sessions became Airbnb's central connection point after the layoffs. Chesky allowed employees to ask any question, promised to share everything he could, and used direct communication to reinforce that employees were not facing the crisis alone.

Questions & Answers

Q: How did Airbnb respond to the COVID-19 travel collapse?

Airbnb first reduced major expenses, including more than a billion dollars in planned marketing spending, and then raised two billion dollars from investors in a deal completed over about 72 hours. After losing 80 percent of its business within eight weeks, the company also reshaped its priorities and laid off about 1,900 employees, approximately 25 percent of its workforce.

Q: Why did Airbnb decide to lay off employees during the pandemic?

Airbnb decided layoffs were necessary after confronting two conclusions. Management did not know when travel would return, and it believed travel would look fundamentally different when it did return. Because the future market would require a differently shaped business with revised priorities, raising money and cutting other costs were not considered sufficient to preserve the existing workforce.

Q: What severance and benefits did Airbnb provide to laid-off employees?

Airbnb provided 14 weeks of severance plus an additional week for every year of service. Because the pandemic was also a health crisis, the company ensured that affected employees had at least one year of health insurance. Departing employees could keep their laptops, and Airbnb offered resources intended to help them move into new jobs.

Q: How did Airbnb help former employees find new jobs?

Airbnb dedicated part of its recruiting team to outplacement work for affected employees. It also invited departing workers to opt into a publicly accessible collection of professional profiles, which recruiters around the world could review. Half a million people visited those profiles, giving former employees visibility and creating opportunities for potential employers to contact them.

Q: How did Brian Chesky communicate Airbnb's layoffs?

Brian Chesky wrote a public letter intended to be brutally honest about the company's position, the reasoning behind the reductions, and the support available to affected employees. He chose to show vulnerability, responsibility, compassion, and heart, even using the word love because he believed cold business conventions often prevent leaders from expressing feelings they genuinely have.

Q: How did Airbnb support morale after laying off staff?

Chesky held a weekly question-and-answer session for five months, allowing employees to ask any question. He promised to look directly into the camera and disclose everything he could, making the sessions a recurring point of connection. He also told employees they were not alone and that the company would move through the difficult period together.

Q: What principles guided Airbnb's workforce reductions?

Airbnb's principles required business reductions to match the future business the company expected to operate. Management also aimed to uphold diversity and belonging, treat each affected employee as personally as possible despite relying on Zoom, consider multiple stakeholders, act quickly, and provide the most generous support the company believed it could reasonably offer.

Q: What did Brian Chesky say people need during a crisis?

Chesky said people fundamentally want connection, but remote work means they must make a conscious effort to maintain it because workplace encounters no longer happen naturally. He also argued that employees need humane, compassionate leadership, honest answers, and reassurance that they are not alone. In his experience, crisis can deepen existing relationships while making each person's social bubble smaller.

Summary

In this interview, Brian Chesky, the co-founder and CEO of Airbnb, discusses how the company has been managing operations during the pandemic and the challenges they have faced. He shares insights into the difficult decision to lay off employees and the steps they took to support those affected. Chesky also highlights how the travel industry is shifting towards more local and outdoor travel experiences. He talks about the measures Airbnb is taking to ensure cleanliness and safety for hosts and guests. Despite the impact of the pandemic, Chesky remains optimistic about the future of travel and the resilience of Airbnb.

Questions & Answers

Q: How has Airbnb been managing operations during the pandemic?

Chesky shares that he spends most of his day in front of a screen, working 18 hours a day. He highlights the difficulties they have faced as a company during this time, especially with trying to go public and adapt to the crisis via Zoom. He emphasizes the importance of making a conscious effort to maintain connections with others, both personally and professionally.

Q: How did Airbnb handle the layoffs and what steps did they take to support their employees?

Chesky explains that there was no playbook for layoffs, but they wanted to approach it with humanity and compassion. They made sure to treat each person individually and not robotically. They exhausted all options, including cutting costs and raising two billion dollars. The decision to lay off employees was made when they realized the travel industry would fundamentally change and they had no timeline for when travel would return. To support the employees, Airbnb provided a 14-week severance, health insurance for a year, and other resources. They also offered assistance with finding new jobs through their recruiting team and by publishing the profiles of laid-off employees.

Q: How has Chesky dealt with the emotional impact of having to lay off employees?

Chesky shares that writing the layoff letter was extremely difficult for him and that he wanted to be transparent and compassionate in his message. He emphasizes the importance of treating people with humanity during a crisis and acknowledges that leaders need to show compassion. He wanted to be brutally honest in the letter and wanted to let employees know that he genuinely cared about them. He believes that business leaders have compassion but often struggle to express it due to conventional business practices.

Q: How is Airbnb maintaining morale among the employees who were not laid off?

Chesky mentions that it has been challenging to maintain morale, especially when people cannot physically gather together. He shares that he holds weekly Q&A sessions with employees to connect with them and answer their questions. He points out that maintaining optimism is important during this time and that there are reasons to be optimistic.

Q: How has the travel industry been impacted by the pandemic and how is Airbnb adapting?

Chesky explains that the travel industry has been hit hard with a significant drop in bookings. However, Airbnb has seen a mix shift from hotels to homes as people choose to travel within their own countries and stay in remote locations. He mentions the rise in bookings for non-urban areas, small towns, and rural communities. Chesky believes that this crisis will lead to a major change in travel trends, with people seeking unique and intimate experiences. He also mentions the rise of small towns and communities as popular travel destinations.

Q: Is Airbnb considering expanding into the RV rental business?

Chesky shares that Airbnb already has thousands of RV rentals on their platform and unintentionally became one of the largest RV rental companies in the world. He points out the increasing demand for unique and intimate travel experiences, and Airbnb allows hosts to offer one-of-a-kind accommodations like cabins, airstreams, yurts, and houseboats. He believes that people are discovering new ways to travel and are interested in staying in interesting and unconventional homes.

Q: How is Airbnb addressing cleanliness and safety concerns during the pandemic?

Chesky talks about the enhanced cleaning protocol that Airbnb launched in collaboration with former Surgeon General Dr. Murthy. Hosts are required to go through an online course to learn about basic cleaning protocols and receive a badge on their listing to indicate compliance. Airbnb also provides guidelines for hosts and has implemented gaps between checkouts and check-ins to ensure minimal contact. They are working on ways to verify the standard of cleanliness and plan to update the review system to include cleanliness ratings.

Q: How long will it take for Airbnb to recover financially from the effects of the pandemic?

Chesky avoids providing specific details about the financial recovery of Airbnb, citing sensitivities regarding discussing financials when the company is preparing to go public. However, he expresses optimism about the company's future and believes they will be stronger than initially forecasted due to the green shoots they are already seeing. He mentions that Airbnb has received significant investments and aims to be a good investment for their stakeholders.

Q: Is Airbnb planning to go public, and how is the IPO process going?

Chesky confirms that Airbnb is still planning to go public and is actively working on the process. He mentions that they have been dusting off the initial public offering (IPO) documents and updating them to reflect the changes in the business. While he doesn't provide a specific timeline for the IPO, he states that they will be ready to go public when the market is ready for them.

Q: Has Airbnb considered creating a category for homes suitable for remote work or quarantine stays?

Chesky expresses interest in the idea and mentions that they have received similar suggestions. He believes it is a good sign and indicates that they may consider implementing such a category. He highlights Airbnb's focus on providing unique and useful experiences for their users and how they have already started addressing concerns like internet speed for remote work.

Takeaways

Brian Chesky and Airbnb have faced significant challenges during the pandemic, with a drastic drop in bookings and the need to lay off employees. However, Chesky remains optimistic about the future of travel and Airbnb's ability to adapt. The travel industry is shifting as people choose to travel locally, stay in remote locations, and seek unique experiences. Airbnb has implemented enhanced cleaning protocols and is working on ways to ensure cleanliness and safety for hosts and guests. They continue to focus on their core mission of connecting people and providing meaningful travel experiences. Despite the uncertainties, Chesky believes that people can handle more challenges than they think and emphasizes the importance of staying connected and following one's intuition during difficult times. As Airbnb prepares for an IPO, Chesky remains determined to lead the company through this crisis and focus on long-term growth.

Summary & Key Takeaways

• Airbnb lost 80 percent of its business within eight weeks as the pandemic disrupted travel. The company cut more than a billion dollars in planned marketing spending and raised two billion dollars from investors, but uncertainty about travel's recovery and future shape ultimately led management to conclude that layoffs were unavoidable.

• Airbnb laid off about 1,900 employees, roughly 25 percent of its workforce. The company provided 14 weeks of severance plus an additional week for each year of service, at least one year of health insurance, retained laptops, and recruiting support designed to connect departing employees with potential employers worldwide.

• Chesky emphasized humanity, transparency, and connection throughout the crisis. He wrote a candid public letter, accepted responsibility, and used compassionate language that business conventions often discourage. For remaining employees, he held weekly question-and-answer sessions, allowed any question, shared everything he could, and reassured employees that they would face uncertainty together.