The travel industry is never going to be the same again, says Airbnb CEO Brian Chesky

In an exclusive chat with Satyan Gajwani, vice-chairman of Times Internet, Airbnb CEO Brian Chesky talks about leading the company during the pandemic.

ETGBS 2020: The travel industry is never going to be the same again, says Airbnb CEO Brian Chesky
In an exclusive chat with Satyan Gajwani, vice chairman of Times Internet, Airbnb CEO Brian Chesky talks about leading the company through the pandemic.

The ET global business summit is built for the business and political leadership of India and it would be great to understand from the founder and CEO directly what exactly is Airbnb and how has it created space in the travel ecosystem.
We started this company over a decade ago. I was a designer living in a three bedroom apartment and my roommate Joe and I couldn’t afford to pay rent. It turns out a design conference was coming to San Francisco. Hotels were sold out and we had an idea. What if we turned our house into a bed and breakfast for the design conference? We didn’t have any beds. We pulled out 3 air beds and we called it airbedandbreakfast.com. We ended up hosting three people that weekend. We made enough money to pay our rent but something more important happened. Our first three guests came as strangers and they left feeling like insiders and at that point we realized maybe there's a bigger idea. Maybe there are other guests, other people in the world. I asked Joe who is the best engineer you know. He said my old roommate Nate is. And the three of us got together and we had this really simple idea. What if you could book someone’s home the way you could book a hotel anywhere in the world. It was hard to trust strangers without developing the components for trust. So we designed a system and over a decade later, we have millions of hosts, homes around the world. I think what we have created is probably a new category of travel based on truly things that are one of a kind. Unique homes and unique spaces anywhere in the world.

You’re a designer and that’s an incredible story, but Brian this is a business conference and I want to know numbers. So, I know Airbnb has raised I think $ 5 billion today. Tell us how does the business of Airbnb stack up today relative to other large hospitality companies.
Yes we have raised substantial amount of money but very importantly, we don’t have to invest billions of dollars because the whole idea of Airbnb is people could provide what they already have in their life. Their extra space, extra time. And we are here to help match guests and hosts. Basically, this trillions of dollars of infrastructure that already exists.. millions of people's homes. We can better leverage them and we can utilize them better. Because it is a capital light model, it works very well in an economic upturn and downturn. Airbnb was started during the great recession of 2008. And it was started before my co-founders and I could even raise any money.


The theme for today’s session is leadership through crisis and there’s no doubt that as the fastest growing travel company in the world, you would have felt your own fair share of crises over the last six months. As I understand, at one point, business fell as much as 80% in less than a few months. Help us understand the roller-coaster that the last six months have been for Airbnb.
At the beginning of March, the world enters a global shutdown. Global travel comes to a standstill and the vast majority of our business drops. It felt like I was captaining a ship and a torpedo hit the side of it. We had more than a billion dollars of guest customer deposits. We didn’t want them to feel unsafe travelling. So we refunded their money but hosts were telling us they needed the money that was being prepaid. So we took $ 250 million in our own balance sheet and paid out hosts. And from there we had to make a lot of very difficult decisions and had to essentially restructure the company. Then all of a sudden we started seeing some glimmers of hope. People after having been locked in their homes for months are saying they wanted to get out of their homes but they don’t want to get on planes, they are not travelling for business and they are not crossing borders but they are getting in a car and they want to travel not more than maybe a tank and a half of gas. And they want to stay in local communities and so there was Airbnb for them and so it has been kind of an optimistic resurgence.

I understand you guys had to lay off almost 2000 employees and I know from experience having worked with you guys in the past that Airbnb is known to have a very employee centric and humane culture and I know downsizing and decisions like that are really hard to take. I understand Airbnb approached it a little bit differently and I wanted to understand the bit about how Airbnb handled restructuring and in hard times. And how was it able to really maintain its culture through that process?
One of the hardest things a CEO will ever have to do is to lay off a portion of their workforce. It was certainly one of the most difficult decisions that I have had to take. I think people in companies expect their leaders to have to make hard decisions but they want to know that they’ll do that with compassion and heart. And I think that the vast majority of people in positions of power and leadership have heart. The problem is sometimes corporate processes don’t have the same heart as the people themselves and they sometimes take a playbook and they put it on auto pilot. We didn’t want to do that. So we wrote out a series of principles. Number one, we don’t want to do two layoffs so if we are going to layoff we are going to have to unfortunately cut deep enough so that our future is secure and people don’t have to worry about a second layoff. The cuts we make have to be mapped to the business that we’ll have in the future. We wanted to do as much as we could for impacted employees. We gave all laid off employees a 14 weeks' severance plus a week per year of service in the US. We also gave them a year’s worth of healthcare. We did a couple of other things that were kind of unique. Our team had an idea. They said what if we took a percentage of our recruiting team and turned them into a job placement firm for those that were laid off. And what if we also printed an alumni directory so anyone that was laid off could opt in to putting their information online. We ended up publishing this alumni directory and at last count, over half a million people visited their profiles and job descriptions. I don’t know how many of them got new opportunities but I sincerely hope that a few of them did. I think some of this stuff doesn't even cost anything for the company to do. So that’s what we tried to do. The whole experience was still very painful for those that were impacted and for people who had to say goodbye to their friends I can only imagine what that felt like. But we tried to do the very best we could. When we started Airbnb our original tagline was travel like a human. That was the basic idea and I always felt the human part of that tagline was more important than the travel part.

How do you see the travel industry over the next six months and even after that. How do you see that changing or recovering from this point?
The travel industry is never going to be the same. It is irreversibly altered. I think there is going to be more travel redistribution. In a world before the pandemic, there was probably an overconcentration of tours going to a handful of small cities. People will still go to those places but they will also redistribute to thousands of other communities. Because people aren’t just flying. They are travelling via car, trains they are going to nearby destinations and these destinations happen to be smaller and less urban. Infact, 60% of our business is now outside of cities. And once you discover less urban areas, more rural areas in national parts, I think it unlocks a whole other part of the world. The other trend is travelling and living are going to start to blur. People are used to thinking travelling is a couple of nights for business or a week or two for vacation. But there is a third category of travelers. It is longer term travel. It is this really unique period of time where if you are working from home you could work really from any home and so that’s a whole new category.

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When is the IPO happening. Are you going to get it done before the election? Before a new presidential regime comes in America?
We filed our S1 which is the registration statement to the securities and exchange commission. That put me in a quiet period so unfortunately I'm not allowed to comment on the IPO or the timing. I've said that when the markets are ready for Airbnb, Airbnb will be public.

Recently you elevated the India head of Airbnb to now become the head of South East Asia. What do you think about India and the South East Asian opportunity for Airbnb?
We think India is a very important hub for Airbnb and through our office in India and through our subsidiary we have a very large number of people that work in India. They not only focus on the India region but they also focus on global guest and host operations. I'm extremely bullish on India. To invest in the Indian market is to be making a long term investment. It has been growing very quickly. I think this is the early part of the very first chapter of the India community on Airbnb and I’m really excited to help the platform enable tens of thousands and one day millions of people become entrepreneurs as hosts on Airbnb in India and allow people in India to not only experience India but experience nearly every country in the world.

I do want to understand the bit about the whole investor dynamic over the last six months. Because so many businesses both in India, and in America have had to really reset expectations. And particularly in tech and in the high growth sector you have been in. At one end you are managing tens of thousands of employees and a hugely volatile operating environment. But when you think of managing up in terms of thinking about the investors and their expectations, tell us something you have learnt about those engagements that you think will help you as a leader going forward as well.
I think in times of uncertainty, the first thing you should do is increase communication. And so when the crisis happened we went to weekly board meetings and I tried to make sure there was lots of communication and outreach to make sure everyone knew what was going on. It's really important in times of uncertainty and change to really tell a story of how you are making decisions, what your principles are. And just really reminding people of the fundamentals of the company. What was true and what always will be true regardless of the crisis. And what we were able to do was tell a story that regardless of the economy, this model was really adaptable. It was founded in a recession. We are entering another recession where obviously people are going to still want to save money while travelling. The whole idea of Airbnb was to kind of feel like more connected to the community you visit. And that wasn’t going to change regardless of a health crisis. People’s desire to travel is fundamental and this desire to connect to the places they go to is really important even if it means that you have to constrain some of the ways in which you do that. So, I think the fundamentals of Airbnb are still there.

I want to talk to you about disruption and I want to talk about disruption because I think it’s a theme that we all talk about. The tech sector is disruptive. But the pace of change in the last six months with regard to technology has completely changed. And it has changed not just for the tech world but for every other space that people thought was different. As an industry disruptor, you have created enormous opportunity, but I bet you have also created a lot of anxiety and stress for the establishment companies in the hospitality space that exist today. A lot of people who are going to be watching this are people who lead very strong established resilient businesses over time but they are trying to think how to adapt to the digital ecosystem that is changing so rapidly around them. If you were to be speaking to a CEO who is managing a relatively established business what advice would you give him or her? In terms of how to think about evolving or being future ready in terms of building their business?
The first thing I'd say is that it’s not about whether I'm disrupting the world or anything. You know what is super disruptive? Young people. The fact that they are born every year and they want to do things differently. The future is going to always be defined by those who are going to be around in the future and those are young people. People younger than me. And that’s the way it works and what I would say to even us at Airbnb, we will have to continue to adapt and change with the new generation. I think they're going to be the ones leading the way over the next 20-30 years. Not necessarily the leaders of companies of today. The next generation is going to decide how they are going to live. That’s what's going to happen.

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India has this incredible emerging entrepreneurial scene with passionate young leaders keen to sort of make their way. What advice would you give to an aspiring entrepreneur in India?
When we started Airbnb, we weren't doing it because we wanted to have a big company. We wanted to do something that we truly loved. We said that we’d rather fail doing something that we truly loved than succeed in doing something we didn’t because then you are stuck continuing to do it if it works. If you are deeply passionate about starting a company you should absolutely do it and sometimes your friends or your family might think you're a little bit crazy. That’s part of the deal with being an entrepreneur. And if it didn’t seem a little bit crazy then someone else may have already done it.
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