Times Square was mostly vacant on the morning of Airbnb’s public offering, save for the dozen or so mask-clad photographers gathered in front of the Nasdaq building to document Brian Chesky’s enormous face, stretched across 9,000 square feet of LEDs. It was December 10, 2020, and Chesky, the high-spirited CEO of the world’s most highly valued hospitality company, wasn’t live from New York for the opening bell, but alone in his attic in San Francisco. Joe Gebbia and Nate Blecharczyk, his cofounders, appeared in dual video feeds below him.
A small group of Airbnb employees and alumni, huddled nearby, high-fived when the clock struck 9:30, the starting gun for Wall Street. “I think the stock market is thoroughly detached from reality,” one of them admitted, shrugging at the screwball logic of investing in a travel company in the middle of a pandemic.
It was a staggering public debut, even by the reality-defying standards of Silicon Valley. Eleven months earlier, the company had realized that it was facing serious trouble: In mainland China, where Airbnb has a sizable beachhead, “We started noticing bookings dropping. And, of course, we knew that was corresponding with the coronavirus,” Chesky recalls. As the virus ripped across the globe, reservations plunged 72% in April, from about 31 million a year before. After a decade of vertiginous growth, it was like nothing Chesky had ever seen. “A company dropping by 80% in eight weeks is like a car driving 100 miles an hour, and then hitting the brakes. There’s no safe way to do that. Things are going to break.”
In the second week of March, as major cities went into lockdown, Chesky convened an emergency meeting of the board to map out a strategy. He had written down a number of principles to guide his response to the crisis: Be decisive, preserve cash, act with all stakeholders in mind, play to win. “To manage a crisis, you need to be optimistic and you need to have imagination,” Chesky says. “Optimism is the most important criteria because the psychology of a leader often becomes the psychology of an organization. If you think you’re doomed, you probably are.”
Airbnb has long prided itself on its so-called airfare, a do-gooder corporate culture where nobody forgets your birthday and employees speak unironically about the power of “belonging anywhere” to make the world a better place. Conference rooms lining the atrium of the company’s airy, Gensler-designed headquarters are modeled after noteworthy Airbnb listings—including an exact replica of the founders’ original living room. “Sometimes you live up to idealism, and sometimes it’s like a bad episode of Silicon Valley,” Chesky jokes.
Suddenly, idealism was colliding with financial reality. Racing to stanch the bleeding, Chesky cut nearly a billion dollars from the marketing budget and raised $2 billion in emergency debt. The terms of the financing included warrants that valued Airbnb at $18 billion, effectively half of its 2017 valuation. On May 5, facing a catastrophic collapse in revenue and no ability to predict when travel might resume, Chesky announced that Airbnb would be laying off some 1,900 people— about 25% of the company’s tight-knit staff. “I used to say we’re a family,” he reflects. “And then I had to evolve my language and say we’re like a family because families don’t do layoffs.”
The new Airbnb would be a leaner, more focused business. In a May 5 memo, Chesky explained to employees that Airbnb would pause its efforts in transportation services and Airbnb Studios, its in-house film division. It would also scale back its efforts to list traditional hotels on the platform, which had been bolstered by its 2019 acquisition of HotelTonight, and deprioritize Luxe, a white-glove offering for the global elite. The crisis, Chesky told staff, had sharpened Airbnb’s determination to “get back to the roots of hosting” and perfect its core product: individual hosts.
Morale took a hit, but investors were quietly thrilled. By summer, millions of Americans were discovering that indefinite office closures meant they could work remotely from anywhere. International travel had flatlined, but domestic bookings showed signs of life as city dwellers scrambled for rural pieds-à-Terre to ride out the pandemic. The company quickly reconfigured its website and app to tempt would-be jet-setters away from virus-scarred cities, where Airbnb is most heavily concentrated, and toward beach houses and cabins, among other photogenic retreats.
Airbnb had already been planning to go public in 2020, and in August, Chesky filed for an IPO. As the listing day approached, in early December, Airbnb increased its target IPO price as high as $60 a share, valuing the rental platform at $42 billion, but demand kept rising. When Chesky beamed onto Bloomberg TV after the opening bell on December 10, he seemed shocked to learn, in real-time, that shares were set to begin trading at about $150. “That’s the first time I’ve heard that number,” he stammered, perhaps doing the mental math that put his company’s valuation at more than $100 billion— and his own net worth north of $10 billion. “It’s . . . that’s . . . um . . . that is . . . yeah . . . I’m very humbled by it.”
Humbled, but for how long? Over the past decade, Airbnb has grown from a simple home-sharing app to a global network of 4 million hosts offering every kind of lodging, delighting guests but enraging city officials and others who regard the ability of travelers to “belong anywhere” as a blight—or worse, illegal. Airbnb’s IPO prospectus estimates its total addressable market to be $3.4 trillion if meddlesome regulators don’t get in the way. With the stock trading at a multiple of about 30 times last year’s $3.4 billion in revenue, investors are betting that the company has plenty of room to grow.
Airbnb still defines itself as a mission-driven startup, even if that mission can appear more like Manifest Destiny. The company has courted large-scale property owners and hotels, sometimes at the expense of its mom-and-pop hosts. It has been slow to clean up perennial issues with its platforms, such as unverified listings and unruly guests. And it hasn’t been afraid to sue cities over regulations when compromise fails. Chesky, with his pivot “back to the roots of hosting,” has proven himself to be a savvy media operator throughout. (An internal memo, circulated shortly after the pandemic hit, discussed how Airbnb could use the crisis to soften its image.) But with travel poised to snap back—and with Airbnb now worth more than Marriott, Hilton, Hyatt, and InterContinental Hotels combined—the company is anything but chastened. Between the lines of Airbnb’s comeback story is a road map for world domination.
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