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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 Gharbia, 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 percent 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, like strangers will live each other, lives 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 pandemic is about as hard.
And and then doing it all via zoom is even more difficult. And I think that what people want right now, just 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.
I'm probably closer to my co-founders. Gionet, 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 you wrote a letter to your employees that is posted publicly and that 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 for how you had to make that hard decision, but also, you know that every employee would receive 14 weeks of pay plus severance and insurance for a year and they'd get to keep their laptops.
And there were resources to help the employees. Kind of walk me through how you 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 that you need to treat people like like people like 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 percent of the business in eight weeks. Wow. 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 even be 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 and 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 your travel company. It's a pandemic and you've lost 80 percent 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 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 of principles and I said we only 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 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 too hard truth, the hard truth.
No 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 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, puts 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. 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 used a word like love in a letter to a lay off, 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 large workforce. How are you making sure that you're keeping morale among the people who 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 imagine it's got like this. You know what the camera gets. This is a little green light next to it.
And I'm going to stare into that green light every week. And I just tell you everything that I can. And that's going to be our point of connection. And 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 only now in a crisis, we're 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 in the day.
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, a lot of troughs of sorrow. Originally, you and your partner sent out 20 emails to investors to invest and not a single one invest 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 twenty thousand dollars with the sale of those cereal boxes. Yeah.
Twenty or thirty thousand it was. Yeah, something like that. Joe told the story we had to raise collectible breakfast, so 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 shows. They were Cheerios and Captain McCain's a maverick and everybody. And at one point we're like literally hot blowing these cereal boxes in our kitchen.
I remember. Wondering I wonder if Mark Zuckerberg ever had to like hot cereal boxes in his kitchen to start Facebook, of course the answer was not this was an ominous sign, but kind of 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 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. Felt like if I was a captain of a ship that felt like suddenly something hit the side of the ship and yet it moved very, very quickly. And so it was kind of 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 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 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 refund.
It all stays related to the pandemic where people need the cancellation of can travel. But then this causes a huge shortfall with our host and we're bleeding cash at this point. But you're going to have or 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 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 Johnny. And I said, well, let's add a zero to that. We got that ten 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 need a place to stay.
Hosts are telling us, hey, we can host these people. And we created this program called Frontline States to provide housing for frontline workers. We had more than 100000 host list their homes for a discount. We waive these. 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 dropped by 80 percent 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 end 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 Airbnb. And so we've seen the 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 when I just work from home.
Right. And they get that a 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 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.
And you're seeing not only population redistribution, you're also seeing travel, redistribution, that all of 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.
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.
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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 the same hotel districts that are really crowded and then standing in line to get their selfie photo and 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 nine states.
Right. 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 the time of reconnection, you know, maybe this is a time 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 that's 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 kind of 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 totally. We are totally booked out for this.
And and so is there sort of a future scenario where Airbnb more aggressively gets into the business of RVs?
Oh, yeah, 100 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 the largest RV rental companies in the world. That's why they're not our our business, the communities. But yeah, I'm sure thousands and thousands of our jobs. We have thousands of treehouses, thousands of airstreams, thousands of years, 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 Afrim 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 Blanken. It's really cool looking. And so you're starting to see some really interesting homes and Airbnb being booked there.
There is a giant boot that you can sleep in. And 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 BMB. It's like a 20 foot high dog and it's a BMB. And I think in Idaho and it's got a waiting list now.
Yeah. I mean, look, all of these examples are awesome and exciting. This a question. I love this question from gyppy. Have you guys considered having a category of like houses suitable for work from home or quarantined homes like a like a little a 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 mattered more in your life than it that's right now. Right. Like, one of the things is making sure that people know the Wi-Fi speed so over a thousand homes have already up to the speed of their Wi-Fi on their Airbnb.
So we want to get hundreds of thousands of homes just to update what kind of Internet do you have, what the speed of your Wi-Fi, what's the buffering rate? Just 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 that 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.
People have to assume, like with the hotel industry in 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. It's not it's not constant, if not significantly. Wow.
So you're seeing you're already seeing sort of similar numbers right now than you were last year.
Yeah. So dropped by about 80 percent. And I mean, you know, nobody knows that this is pent up demand or not. But no, we're around last year's levels all around the world are 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, mix shift 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 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. While 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 staff to the United States, Vivek Murthy. You create a cleaning protocol and people don't want to be in crowds and they perceive Airbnb is as the safer option.
Yeah, we're getting questions about that from from our our listeners. I mean, in terms of cleanliness, how. Are you how do you ensure that that the hosts are keeping their properties clean? There's a question from Mary Elliot Coughlin, our 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 that we launched this thing called the Enhanced Cleaning Protocol that we asked hosts to go through, basically like an online course that they go through the course. 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's this 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 that now we're working on other things like update and review systems. So when people stay, they can rate the cleanliness. And did the host seemed very responsive. And then we're going to be working on ways to essentially verify the standard of cleanliness of, 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 going public.
I mean, is that on the back burner now of taking the company public?
No, I've when this interview is over, I will be resuming work on that. I have to go public. You've got to right. This securities document called the next one. And it's like a 300 page page turner. It will it will not it will not compete with your favorite American literature as the Sunday night reading. But we we're going to file it late March. We put on the shelf. And recently we've been dusting it off, you know, and and you have to update it because the business has changed.
So you've got you've got to kind of write it more 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.
Brian, 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 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 in your company during this time period?
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, 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. But we're actually to get everything's connected. We're all connected. If you kind of 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 kind of follow your your own heart, your own intuition. You know, before a pandemic, everybody was stretched thin. We are 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 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 right 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 what's your alternative at this point anyway?
And so I started realizing that, like, we need to get back to the basics. When you get back to roots, back to what is truly special about Airbnb, which is connecting people without belonging, because we didn't start this company to be a travel company, we didn't start 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 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 we take 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, Dotcom, how I built this. And if you want to see all of our past live interviews, you can find them there or at YouTube, dotcom, 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, dawg.
This episode was produced by Candice Lim with help from Wil Mitchell, Tirah, Lockhardt, Matt Atom's, Jeanna Cappadocia, John Isabella, Julia Kanae, Neva Grant and Jeff Rogers. Thanks for listening. Stay safe and I'll see you in a few days. I'm Guy Raz, and you've been listening to how I built this from NPR.