Pod Insights How I Built This with Guy Raz How I Built Resilience: Brian Chesky of Airbnb About this episode In the early stages of the lockdown, Airbnb was in a freefall: it lost 80 percent of its business and laid off a quarter of its staff. But CEO Brian Chesky tells Guy that as people start to travel again—in cars, and closer to home—the company is beginning to recover. These conversations are excerpts from our How I Built Resilience series, where Guy talks online with founders and entrepreneurs about how they're navigating turbulent times. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Guy Raz? We get support from US Bank. A question I love asking founders. What's the one decision you almost didn't make? The one that changed everything? Because it's never the obvious stuff. It's never, I decided to start a company. It's the small, boring, Tuesday afternoon decision you barely remember making until you realize it's the reason everything after it either worked or didn't. Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems.
0:45 Guy Raz? But here's the thing. Path A, you keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned. Money that could have gone back into the business. Path B, you pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes
1:30 Guy Raz? based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc. Some restrictions apply. Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question. Not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way. A public benefit corporation founded on one Hard question. How do we make sure AI goes well for people?
2:14 Guy Raz? So they asked over 100,000 people their hopes and their fears and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that can help them write the business plan, build the prototype, analyze the market, maybe even come up with the idea. What separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt.
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4:21 Guy Raz? NetSuite Next surfaces insights exactly when you need them, puts agents to work on routine tasks and problems, and lets you ask complex questions in plain language, like talking to a knowledgeable colleague. But technology is only part of the story. AI is also reshaping how people and teams work together, and that shift is already underway. That's why NetSuite wants to put a new, expert-created business guide in your hands today. It's called Aligning for the Agentic Era: How AI is Changing Everyday Work. And right now, it's yours, absolutely free. Inside, you'll discover how AI could reshape work across your entire organization, and how to position your business to prosper from it.
5:06 Guy Raz? If your revenues are at least in the seven figures, get NetSuite's free business guide, Aligning for the Agentic Era: How AI is Changing Everyday Work, at netsuite.com/built. The guide is free to you at netsuite.com/built. netsuite.com/built. 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 Gebbia, and he told the amazing story of how they founded and built the company.
5:51 Guy Raz? 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.
6:06 Speaker 01 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 would live each other, live with each other. Like that was the hardest thing we were ever gonna 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 of pandemic is about as hard. And then doing it all via Zoom, it was 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 now you have to fight for it. You know, you have to make
6:48 Speaker 01 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, you know, probably closer to my co-founders, Joe and Nate. 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 also has a way of making your bubble a little bit smaller. And that's probably what's happened for me.
7:07 Guy Raz? Yeah. You, you wrote a letter to your employees that is posted publicly. And that letter is 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 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?
7:52 Speaker 01 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, when the crisis happened, we felt it in mid-March. It was pretty serious. We spent twelve years building Airbnb and then we lost eighty percent of the business in eight weeks. Wow. It, 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 Airbnb survive? I never thought I'd read an article like that.
8:37 Speaker 01 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. Then 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 a travel company. It's a pandemic and you've lost eighty percent of your business in like eight weeks. The people get nervous. Thankfully, um, we had some great investors step up. Um, 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 certainly have ever done and they've ever done. So before that layoff even happened, I wrote a couple of principles. And I said, I, we, we have a handful of stakeholders.
9:19 Speaker 01 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. Yeah. We came to the conclusion that we would have to do layoff when we confronted two hard truths. The hard truth, number one, was this, that we did not know when travel would return. Nobody did.
10:01 Speaker 01 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 have, change that 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, you know, 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 fourteen week severance puts a week per year service. We felt like, well, this is a health crisis. People need health insurance.
10:43 Speaker 01 And so we made sure that everyone had at least one year of health insurance, even after they were getting laid off. Um, one of the things that I'm most proud of that our team came up with. Um, 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 find, do 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 the 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.
11:27 Speaker 01 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 with, to, to a layoff. 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.
12:02 Guy Raz? I mean, nineteen hundred employees had to be laid off, but you still have a, a large workforce. How are you making sure that you're keeping morale among the people who, who are still working at Airbnb?
12:13 Speaker 01 Oh, it's so hard. I was warned ahead of time that not only is a layoff gonna be difficult, but the months after a layoff, 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 and A. I said, no matter what question you ask, I have this iMac and it's got like this, you know, what the camera got, this little green light next to it. And I'm gonna stare into that green light every week, and I just tell you everything that I can, and that's gonna be our point of connection. I tell people, you're not alone, we're gonna 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
12:55 Speaker 01 say to me, things are never as good as they seem and as bad as they seem. Well, if that's true, 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 suddenly 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 is essential is the relationships that we have with people. That's what we have at the end of the day.
13:29 Guy Raz? Um, 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, um, a lot of troughs of sorrow. Originally, um, you and your partner sent out 20 emails to investors, um, to invest, and not a single one, um, invest in your company. Um, you've had several setbacks trying to stand up Airbnb in 2008, 2009. At one point, you made cereal, a box of cereal to get attention. Um, and I think you raised $20,000 with the sale of those cereal boxes.
14:03 Speaker 01 Yeah, like 20 or 30,000 it was. Um, yeah, something like that. Joe told the story. We had to raise collectible breakfast cereal. We were airbed and breakfast. So we said, well, let's do collectible breakfast cereal for the Democratic Republican national conventions in 2008. Joe and I, we made these Obama o's, they were Cheerios, and Captain McCain's, a maverick in every bite. And at one point, we're like literally hot glowing these cereal boxes in our kitchen. I remember wondering, I wonder if Mark Zuckerberg ever had to like hot glue 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.
14:39 Guy Raz? 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 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?
15:01 Speaker 01 When the pandemic hit, we said, we are going to be decisive. Felt like if I was a captain of a ship, it felt like suddenly something hit the side of the ship and you had to move very, very quickly. And so it was kind of all hands on deck. First thing is we had customers cancel over $1 billion 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, well, 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.
15:45 Speaker 01 What we decided to do is we refunded all stays related to the pandemic where people needed cancellation because they couldn't travel. But then this caused us a huge shortfall with our hosts and we're bleeding cash at this point. Like and 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, and we sent it to our hosts. Just didn't loan it, just sent it to hosts. 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 hosts. And Jonay and I said, well, let's add a zero to that. We got that to $10 million and we created a little special grant program.
16:30 Speaker 01 Then suddenly, we noticed that there were nurses, EMTs and doctors, and they were going into hot zones and needed places to stay. Hosts were telling us, hey, we can host these people. And we created this program called frontline stays to provide housing for frontline workers. We had more than 100,000 hosts 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 eighty 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 ended up happening is people weren't getting on planes.
17:14 Speaker 01 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 at Airbnb. And so we've seen a 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, why don't I just work from any home?
17:39 Guy Raz? Right.
17:39 Speaker 01 And they get that home on Airbnb. So it's a totally different world. And 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, but you're also seeing travel redistribution, that all 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.
18:14 Guy Raz? 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.
18:37 Guy Raz? Hey, welcome back to How I Built This: Resilience Edition. Earlier this year, Airbnb experienced an 80% drop in business. But CEO Brian Chesky says- Is that people are traveling again, they're just not getting on planes and they're staying much closer to home.
18:54 Speaker 01 People are gonna, instead of traveling to the same 20 cities, going to same hotel districts that are really crowded, and then standing in line to get their selfie photo instead of seeing landmarks to put it on Instagram, say, look, I got that too. They're gonna have to make some different choices and maybe those won't be so bad after all. What they're gonna do is they're gonna travel outdoors. For example, there's 400 National Parks United States.
19:16 Guy Raz? Right.
19:17 Speaker 01 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 a time of reconnection, you know, maybe this is a time reconnection to family. This 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 gonna see. I think this is gonna just change trends. I think people are gonna want to kind of reconnect to nature. This is a big change.
19:53 Guy Raz? 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.
19:58 Speaker 01 Totally. We are totally booked out for these.
20:00 Guy Raz? And, and so is there sort of a future scenario where Airbnb more aggressively gets into the business of RVs?
20:07 Speaker 01 Oh, yeah. A hundred percent. I mean, I don't even know how many thousands of RVs are on Airbnb right now. I'm gonna have to look. But we're probably, without having intended to be in that business, we're probably one of the largest, largest RV rental companies in the world as far as they're not RVs, it's the communities, but yeah. I'm sure thousands and thousands of RVs. We have thousands of treehouses, thousands of Airstreams, thousands of Yurts, 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 imagined, these A-frame homes or these like really interesting architectural gems.
20:50 Speaker 01 They're saying, I want to go somewhere with an interesting home. This home is in the middle of Blank and it's really cool looking. Starting to see some really interesting homes in Airbnb being booked. There, there, there is a giant boot that you can sleep in in 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 B and B. It's like a 20 foot high dog and it's a B and B and I think in Idaho and it's got a waiting list now.
21:18 Guy Raz? Yeah. I mean, look, all of these examples are awesome and, and exciting. Um, this is a question. I love this question from Gip Yee. Um, have you guys considered having a category of like houses suitable for work from home? Or quarantined homes, like a, like a little category for those things?
21:34 Speaker 01 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, mattered more in your life than it does right now. Right? Like one of the things is making sure that people know the wifi speed. So over a thousand hosts have already updated the speed of their wifi on their Airbnbs. We want to get hundreds of thousands of hosts just to update what kind of internet do you have? What's the speed of your wifi? Um, 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 wifi speed. So really basic things like that, which you kind of took for granted before we asked, do you have wifi? Now it's like, well, how fast is the wifi? Cause it really matters to people.
22:17 Guy Raz? I have to assume like with the hotel industry and the travel industry, a significant part of your business does come from business travelers. Right? And, and presumably your business is still significantly lower this year, this time this year than it was last year.
22:30 Speaker 01 It's not, no.
22:31 Guy Raz? It's not.
22:31 Speaker 01 Not significantly, no.
22:32 Guy Raz? Not significantly. Wow. So you, you're seeing, you're already seeing sort of similar numbers right now than you were last year?
22:38 Speaker 01 Yeah. So it dropped by about 80%. And I mean, you know, nobody knows if this is pent up demand or not, but no, we're, we're around last year's levels.
22:46 Guy Raz? All around the world?
22:47 Speaker 01 Or, uh, averaged out, you know, Latin America and Asia are lower. North America and Europe are higher.
22:54 Guy Raz? Wow. And that's because people aren't getting on planes.
22:56 Speaker 01 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 they 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. Well, 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 search general in the United States, Vivek Murthy, to create a cleaning protocol. And then people don't want to be in crowds and they perceive Airbnb as a safer option.
23:31 Guy Raz? Yeah, we're getting questions about that from our listeners. I mean, in terms of cleanliness, how do you ensure that the hosts are keeping their properties clean? There's a question from Mary Elliott Coglan Nowar via Facebook. How do you guys make sure that the hosts are really sanitizing their homes?
23:48 Speaker 01 Yeah, so this is the whole program that we're doing. We've launched this thing called the Enhanced Cleaning Protocol. We ask hosts to go through basically like an online course. If 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 says Enhanced Cleaning Protocol. We've created gaps between checkouts and check-ins of 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 updating a review system. So when people stay, they can rate the cleanliness and did the host seem very responsive? And then we're going to be working on ways to essentially verify the standard of cleanliness as well.
24:33 Speaker 01 That's a little bit harder problem, but there's a whole system that we're working on.
24:36 Guy Raz? You know, to this point of going public, I mean, is that on the back burner now of taking the company public?
24:43 Speaker 01 No, when this interview is over, I will be resuming work on that. To go public, you've got to write this securities document called an S1. And it's like a 300-page turner. It will not compete with your favorite American literature as a 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 you have to update it because the business has changed. So you've got to kind of write it 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.
25:25 Guy Raz? Brian, you know, when you think about where your business is going to be in five years 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 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 and your company during this time period?
25:51 Speaker 01 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 generally not alone. I think sometimes people listening, they probably feel alone. I bet you everyone's less alone than they think they are. But we're actually together. 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.
26:34 Speaker 01 And the second thing I've learned is to kind of follow your own heart, your own intuition. You know, before pandemic, Airbnb was stretched thin. We were sprawling. We were 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 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.
27:17 Speaker 01 And by the way, what's your alternative at this point, anyway? And so I started realizing that like, we need to get back to the basics. We need to get back to roots, back to what is truly special about Airbnb, which is connecting people, about belonging. Because we didn't start this company to be a travel company. We didn't start this 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 I'm going to take out of this.
27:50 Guy Raz? Yes, indeed. Brian Chesky, thank you so much for joining us.
27:54 Speaker 01 Thank you very much.
27:55 Guy Raz? 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/HowIBuiltThis. 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 Resilience series or other virtual NPR events, you can go to nprpresents.org. This episode was produced by Candace Lim with help from Will Mitchell, Tyra Lockhart, Matt Adams, Gianna Capadona, John Isabella, Julia Carney, 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.
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