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Of the Silicon Valley unicorns expected to go public this year, Airbnb might be the most anticipated.
The San Francisco-based company was valued at $31 billion in its last funding round in 2017 and announced plans to go public in 2020 last year. Brian Chesky, chief executive and co-founder, says his team is working to ensure the company has a successful initial public offering — though he can’t comment when he expects it to happen.
Hosts on the short term rental platform own more than 7 million homes in 220 countries and regions, he says, with hosts — mostly women — earning $80 billion since the company started.
In 2019, anticipated billion-dollar IPOs from big-name tech companies like Uber and Lyft performed worse than expected. Despite this, Chesky says he wants to give shareholders a chance to sell their stake in the company.
Airbnb lost $322 million in the first nine months of last year, which could affect the price of its IPO, the Wall Street Journal reported on Tuesday. Chesky says a need for cash isn’t driving the company to go public, but rather a desire to give investors the option to sell their stock now that Airbnb is more than 10 years old.
“Whether it's a good time or a bad time, I think very few people remember how we went public. They're just going to remember who we are as a public company,” he says. “I ultimately think successful IPOs are really just successful companies going public.”
Another headline that shocked the tech world in 2019 was ex-CEO of Uber Travis Kalanick selling off $1.7 billion in stock following the end of the company’s IPO lockup period. But Chesky says he and his two co-founders — Nathan Blecharczyk and Joe Gebbia — plan to continue investing and maintain their large roles in the company.
The trio founded the company in 2008 during the Great Recession. A decade later, Chesky says he’s not worried about the tech bubble bursting because he believes the concept behind Airbnb — an idea investors and friends once called “crazy” — can work “irrespective of the economy.”
“I think it's going to endure. People want to save money. People want to meet other interesting people,” he says. “And that's going to happen regardless of where we are on the economic cycle.”
During the Great Recession, people started turning to Airbnb as a way to afford their homes, he says — though the company has been criticized for driving up rent costs in expensive cities.
When he started the company, Chesky says he and Gebbia couldn’t afford their San Francisco rent. The weekend they started the company, all of the hotels in the city were sold out, so they decided to turn their house into a bed and breakfast to house people for a design conference.
Without any extra beds, his co-founder provided three air mattresses and the duo launched Airbedandbreakfast.com. Now, Chesky says a majority of hosts say they use the platform to pay rent or afford to stay in their homes.
“The reason we started this company is because we couldn't afford to pay rent,” he says. “And many people turned to us originally because they couldn't afford to pay rent.”
But that could be changing. The Information found the number of Airbnb listings likely operated by hospitality professionals grew 36% last year — more than three times the increase in listings for rentals or spare rooms. Chesky maintains that the majority of hosts on the platform are regular people renting their homes and not hospitality professionals or hotels, a continued trend since he started the company.
Some critics of Airbnb say the company turns residential communities into neighborhoods full of tourists and fights regulation. But Chesky says the company tries to strengthen cities by working with each one individually and providing data to help communities make the right decisions.
While the company may debate regulations, he says it complies once the proposed rules become law. Such laws include restrictions on the amount of Airbnbs allowed in certain neighborhoods or the number of nights a guest can stay.
CEOs need to take responsibility for the impact their companies have on society, he says. This wasn’t the case when he first entered the culture of Silicon Valley.
“When you think of yourself as a platform, you don't think of yourself as taking as much responsibility,” he says. “I think we in the industry have had to learn sometimes the hard way that we have to continue to take more responsibility for activity on our platform.”
To try to keep the company accountable to all people impacted by the platform, Airbnb has adopted a set of “21st-century principles.” These corporate governance guidelines aim to help the platform strengthen the communities it serves and rectify any negative impacts, he says.
For example, the company has made agreements with hundreds of cities around the world that often include taxes, he says. Airbnb collected $2 billion in hotel occupancy tax in 2019.
“We want to be responsible,” he says. “And if there are negative impacts that our community is having, we want to remediate that situation.”
Historically, CEOs of public companies are supposed to serve shareholders — but Chesky says people expect that business leaders are also accountable to customers, other stakeholders and issues such as sustainability.
Beyond thinking about investors, CEOs need to consider how their companies impact the world, he says.
“Frankly, what I would say is the best thing for shareholders are companies that society wants to exist,” he says. “Society is not going to want companies to exist if they don't think they actually are taking them into consideration.”
The company started to enact these principles by defining its various stakeholders — guests, hosts, communities the platform operates in, employees and shareholders. The next steps are establishing what to do to serve them and then, most importantly, measuring how the company impacts each party, he says.
Airbnb created a new committee at the board level dedicated to overseeing the company’s commitments to these stakeholders, he says. The Stakeholder Committee will be chaired by Belinda Johnson, who now serves as chief operating officer.
To address concerns from non-white customers, the company is partnering with the NAACP to combat racial discrimination on the platform after black users posted about their experiences under #AirbnbWhileBlack.
In response, the company started asking members to attest that they won’t discriminate against other users when they first sign up — a move which Chesky says sparked thousands of angry emails and people deleting their accounts.
Working with civil rights groups like the NAACP to develop a multi-year plan to reduce bias and discrimination on the platform resulted in changes like not showing guests’ photos to hosts in conversations about bookings, he says. For people who feel discriminated against, the company created a hotline they can call to connect with an agent who will help find a suitable place to stay.
“Our core belief is that we want to help bring people together and make them feel like they can belong in communities all over the world,” he says. “Discrimination is an obstacle to belonging.”
After the Halloween shooting, the company announced plans to verify every listing, host and guest. Chesky hopes to accomplish this by asking users to leave reviews — which 70% of guests already do — and building a team of people to do remote inspections.
Few tech companies have attempted to verify the information on a platform, he says. This is a first in the travel industry, but more importantly, Chesky believes it speaks to broader conversations happening in tech.
“Tech companies are shifting from being open platforms to taking more responsibility for what's on their platform,” he says. “This is something that I wish we did more of sooner, but I'm happy we're doing what we're doing now.”
This segment aired on February 12, 2020.
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