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How I Built Resilience: Brian Chesky of Airbnb
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Hey, everyone, and welcome to how I built this resilience Edition on. These episodes were talking with entrepreneurs and Business Leaders about how they're adapting to these difficult Economic Times. And that's a show or going to hear from Brian, chesky the CEO. And co-founder of Airbnb back in 2016. We spoke with Brian's co-founder, Joe gebbia 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, I think Joe and I used to talk about how starting Airbnb, Bixby this idea that like strange to live each other live with each other. Like, that was the hardest thing you're 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 pandemic, just about as hard. And then doing it all by a zoom, that you was even more difficult. And I think that would people want right now and I'm just more fundamentally its 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. Get on the one hand, I'm closer to some people I've ever been in my life. I'm probably closer to my co-founders donate, we talk all the time and when you're going through crazy. The time it has a way of bringing you closer together 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 that letter. Is this remarkable 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 extreme.
Transparent, you describe 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 Severinsen insurance for a year and they leave the keep their laptops in the world resources to help the employees can walk me through how you how you came to write that letter and how you kind of do with that, just emotionally. There is no Playbook. I don't think the late people off in, 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 don't wind up with a crisis happened, we felt it in mid-march, it was pretty serious. We spent twelve years building Airbnb and we lost 80% of business in eight weeks. One of the success stories, right? And then suddenly 8 weeks there's you know all sorts of concerns articles will ever be survive. I never thought I'd read an article like that and we made a lot of hard decisions. We first cut in normal summon a cost. We cut over a billion dollars of plan marketing spend and we quickly raised $2000000 is not easy to raise two billion dollars. It's more difficult to raise two billion dollars from your travel company. It's a pandemic and you've lost 80% your business in like 8 weeks the people get nervous. Thankfully I'm with and great investors step up, but we had to do that deal and that was like over the course.
Seventy-two hours to like get that deal done. It was the fastest Eli thing. I don't have ever done and they've ever done. So before that layout even happen, I wrote a couple principal 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 handle this crisis. Andy, Grove, this famous university, bad comes destroyed by a crisis, good company, survival prices, and great company Thrive or are defined by a crisis. I said we're not going to be the kind of company be destroyed by this. So we're going to try to take care of each of our stakeholders. And when we got to the employees, we basically had exhausted all options having raised $2000000 became the conclusion that we would have to do lay off when we confronted to hard truth, 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 have to change that shape of our business is what we focused on. Until then we just realized that we had to approach this with a sense of humanity. I said is we should be, you know, as generous as we possibly could be and not less generous than that. Why would you do that? Until 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 weeks, Severance put the week for your service. We felt like will this is a Health crisis people need health insurance. And we made sure that everyone had at least one year of health insurance, even if we ever getting laid off, one of the things that I'm most proud of that, our team came up with Joe in the team, came to me and they said, you know what, we have our recruiting team, maybe we could dedicate a percentage of the recruiting team to font, do a job out placement for the people being laid off. Maybe we could basically be a noun,
Play some team to help them find jobs in the last thing I'll say is running 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 a certain way to act in a certain way to act is a way where you kind of like you're you're not vulnerable you know you don't take too much responsibility and I was like you do the one thing people want to know is that leaders have compassion because at this. Time, if leaders don't have compassion then we are all in a very precarious situation and compassion means actually having heart 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 with it, with two 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, 1900 employee has had to be laid off, but you
I'll have a large Workforce, how are you making sure that you're keeping morale? Among the people who, who are still working at Airbnb 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 5 months, I do a weekly but I kind of Q&A. I said, no matter what question you asked, I have a iMac and Scott like this, you know what the camera. This is little green light next to an economist are into that green light every week. Now, I 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 he 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 as bad as they seem. Well, that's true. Things weren't may be as good as they seemed in January, but that also probably means things aren't as bad.
As they seen here in July, I'm seeing the humanity of people that love had come through the surface, and you started only now in a crisis, we're reminded of some of the things that are most essential and those things that are most in the central are not the things that come in cardboard boxes to our front door. That the essential is a relationship that we have with people. That's what we have in the day, I was talked 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 trucks of Sorrow originally you and your partner sent out, 20 emails to investors to invest and not a single one. Invest in your company. I mean 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 raise $20,000 with the sale of the cereal boxes.
Yeah, I mean 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 CEO for the Democratic Republican national conventions in 2008 Joe and I, we made these Obama's, they were Cheerios and Captain McCain's a Maverick and every bite. And at one point, we're like literally hot glowing the cereal boxes in our kitchen. I remember wondering. I wonder if Mark, Zuckerberg ever had to like hot-glue in cereal boxes in his kitchen. Start Facebook course. The answer is not, this was an ominous sign, but kind of we live through it, in in the family was 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
Take five of the captain of a ship that felt like, someone leaves something, hit the side of the ship and yet I move very very quickly. And so it was kind of all hands on deck. First thing, as we had over, we had customers cancel over, 1 billion dollars of reservations. 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. It, we had a huge predicament. What do you do when a billion people want a billion dollars or refunds? And another group of people tell you what, we don't get that billion dollars, then we're going to be in a really bad spot. Well, that's a really bad situation is not our money with you. Just hold the money. What we decided to do is we refund it. All stays related to the pandemic. What? People need two cancellations can travel, but then this card is a huge rush or fall with their house and we're bleeding cash at this point. By going to have her never in our history. Have we bled cash. In fact, we'd with more money in the bank and we raised before the pandemic suddenly we're losing a lot of money. We took
A billion dollars, 250 million dollars only sent it to our house. Just didn't loan it. Just sent it to hoes at yummy would have needed even more, but it was the most we could do. And then our employees rose up, they offered up to a million dollars that our own money through, like things like strokes, and travel credits, to give to our house and Joan and I said, we'll let that his ear that we got that from the ten million dollars. We created a little special grant program. Then suddenly, we noticed that there are nurses, aunties and doctors and they were going to hot sun to need a place to stay. Hoes are telling us. Hey, we can host these people and we conquered this program called Frontline states to provide housing for Frontline workers. We had more than a hundred thousand hoes 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 80% and 8 weeks. And we thought while 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 wind 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 the car. They were driving to remote destination within about two hundred miles and staying at an Airbnb. And so we've seen a major surgeon bookings in non-urban areas, small towns in rural communities. People staying longer people saying, if I'm going to work from home, when I just work from any home and they get that. So it's a totally different world and I think I mean the may be the most fundamental change that I see in our world that's going to happen if you're so fortunate enough to book Louie upper middle-class person or 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, the Osteen travel reducer.
That all these new communities are really, welcome, and Gaston are going to welcome them for a longer. 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 are B&D? Will try to respond to them. Stay with us. I'm guy Roz, and you're listening to how I built this resilience Edition from NPR.
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Welcome back to how I built this resilience Edition. Earlier. This year, Airbnb, experienced a 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, the same Hotel districts that are really crowded and then standing in line to get there selfie photo instead of saying landmarks to put it on Instagram. See 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 it going to travel Outdoors? For example, there's four hundred national parks tonight's. It's like most Americans live within a tank of gas of a national park. In National Parks have historically not been the main way people travel. They go to Miami to go to Vegas, you know, they could go to Times Square. Well, I think that if this is a time of reconnection, you know, maybe this is the time reconnection the family. This is also could be a time of Rican.
Russian with nature and the outdoors for a lot of people. I mean, where we seen huge growth, cabins are streams camping. This is, that's the kind of trouble that you're going to see. I think this is going to just change trans. I think people are going to want to kind of reconnected nature. This is a big change. I mean, yeah. I mean, are you seeing any we're seeing a world where, you know, it's impossible to get an RV. And so, is their sort of a future scenario where Airbnb more aggressively gets into the business of RVs right now, and I have to look, but we're probably without having intended to be in that business were probably one of the large, the largest RV rental companies in the world as much as they're not are RVs the community. But yeah, I'm sure thousands and thousands of Barbies, thousands of tree houses, thousands of Airstream, thousands of years, thousands of house boats, and I think that people are discovering you
Week one of a kind, they want things that little more intimate, more local and one of the cool things by Air B&B is like the most insane space that you ever imagined these a frame homes or he's like really interesting architectural gems. They're saying, I want to go somewhere with an interesting home this home and I'm in the middle of blank and it's really cool. Looking until you're starting to see some really interesting homes in Airbnb. Being book there, there there is a giant boot that you can Sleep Inn in New Zealand. Somebody built a giant boot, it's like a 15-4, high boots. There is a dog that you sleep in this called the dog bark Park. B&B hot dogs and it's a DMV. And I think in the Idaho and it's got a waiting list now. Yeah, I mean, look, all of these examples are awesome and, and exciting on this question. I love this question from Gypsy. I'm have you guys considered having a category of Like Houses suitable for work from home or quarantine to alms like a like a little category for those things? I love that we have not done it yet.
I love the idea. I feel like this is a good sign that we should do it. One of things we now do is for example we your internet speed never met mattered more in your life than it does right now, right? Like one of the things that's making sure that people know the Wi-Fi speed. So over a thousand host of already updated the speed of their Wi-Fi on there, airbnb's, who want to get hundreds of thousands Hostess to update. What kind of Internet do you have? What's the speed of your Wi-Fi? What's the buffering range of to some people? Like they have work where they need to rely on it and then we're going to ask like in the reviews to confirm, like, Wi-Fi speed. So really basic things like that, you kind of took for granted before we ask. Do you have Wi-Fi now? It's like what how fast is the Wi-Fi, cuz it really matters to people. I have to assume like with the hotel industry in the travel industry. A significant part of your business does come from business Travellers, right? And then presumably, your business is still significantly lower this year, this time this year than it was last year. If not, it's not the sort of similar
Numbers right now than you were last year yet so drop by about 80% and I mean you know nobody knows this is pent-up demand or not but now we're around last year's levels all around the world. You know Latin America and Asia are lower North America and Europe are higher and that's because people are getting on plane Smith shift from hotels, two homes. I mean if your Miss City and you want to go out of the city to a small community, the smaller the committee less likely to have a hotel because the hotel only works with density, right? You need to buy the rooms any deficiency it. So people are basically traveling and going to small communities wall, 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 form birth certificate on the United States with that Mercy. Create a cleaning protocol and then people don't want to be in crowds and they proceed. RB and B is a safer option about that from our listeners. I mean, in terms of cleanliness, how do you
How do you ensure that the house are are keeping their their properties play music with this question for Murray Elliott, caughlin hour by Facebook. How do you guys make sure that the hosts are really sanitizing your homes? Does the whole program that we're doing? We launch this thing called the enhanced cleaning protocol that we asked the host to go through. Basically like an online course, if they go through the course, it's got like basic cleaning protocols, they got a badge or seal under listing, you'll see it. And it says right below the listing, I think it does enhance, cleaning protocol, we've created gaps between checkouts and check-ins 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 I didn't refuse system. So when people say, they can write the cleanliness into the hosts seem very responsive and then we're going to be working on ways to essentially verify the standard of coming as well. That's a little bit harder problem, but there's a whole system that we're working on.
Go to this point of of going public. I mean, is that on the back burner now of of taking the company public know, when this interview is over, I will be resuming. Work on that. I'm to go public. You got to write this Securities document called in at 1 and it's like a 300-page page-turner. It's it's not, it will not compete with your favorite American literature as the Sunday night reading, but 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 cuz this is James so you've got he got kind of right at more more differently. So that's what I'm doing and we don't know when we'll be public but I basically said will be ready this year. If the markets ready for us, if the market is 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 learn from this time, you know, as a leader
It's been really difficult. It's been extremely challenging your, your your 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 and 5 your time from now that you've really learned about yourself and your leadership in your company? During this time. 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, as 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, in 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 to probably feel alone. I bet you everyone's left alone. They think they are, or actually took everything is connected. We're all connected. If you can a lien 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 then we just need to remind ourselves of them and reach out to them.
Second thing I've learned is to kind of follow your your own heart, your own situation, you know, before pandemic Airbnb was stretched. Then we are sprawling. We're going to all these businesses and I'm just kind of feeling pressure of trying to make everyone happy in 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 during 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 called. Principle-based decisions. If you can't predict where the world 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 up, 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 Air B&B, which is connecting people, but not belonging because we didn't start this company to be a
Travel company meeting starts, DB a real estate company. It was a bad connection and if it took a crisis for us to get back to that corner truth, then that's where we're going to focus on. We're not alone and we all have something to real needs me to focus on that. That's when 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.com 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 NPR if you want to find out more about the how I built this resilient series or other virtual NPR events. You can go to NPR presents. Org. This episode was produced by Candice limb with help from will Mitchell, Tyra Lockhart? Matt Adams, Gianna, capadona. John Isabella. Julia Kearney and Eva Grant and Jeff Rogers. Thanks for listening, stay safe and I'll see you.
A few days, I'm guy Roz, and you've been listening to how I built this from NPR. This message comes from NPR sponsor, Capital One Shopping Capital. One shopping is an online tool that instantly searches for available coupon codes and automatically applies them at checkout to make saving money easier. Just download the Capital One Shopping browser extension to your computer, and let it do the work for you. It's easy free. And you don't even need a Capital One card to use it. Capital One Shopping, what's in your wallet savings and available. Coupons very
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