There's just a few days left to snag some Marketplace swag at a discount when you... Donate Today! 🎁
Airbnb CEO Brian Chesky says post-pandemic, cities might actually want the company around
Mar 8, 2021

Airbnb CEO Brian Chesky says post-pandemic, cities might actually want the company around

HTML EMBED:
COPY
"Some of them actually said they wanted to partner with us to get more demand because, they said, 'We have major budget shortfalls now.'"

It has been a roller-coaster year for a lot of businesses, few more than Airbnb.

The company saw an 80% drop in business last spring as the pandemic hit. It laid off a quarter of its employees, raised $2 billion in private funding and hurried the heck up and introduced Online Experiences like virtual cooking classes to try to make any money at all. But by December, it had recovered enough for a blockbuster initial public offering and a profitable third quarter.

Now the company is preparing for the return of its core business and its preexisting challenges, like being blamed for housing shortages, as well as facing new ones, like whether to house rioters planning to storm the U.S. Capitol.

Brian Chesky is the CEO of Airbnb. The following is an edited transcript of our conversation.

Brian Chesky (Photo courtesy of Airbnb)

Brian Chesky: In the wake of the Jan. 6 insurrection in Washington, D.C., a thought occurred to us, and the thought was, “Where are these people staying?” And the next thought occurred to us is, “Wait, people are going to come back to D.C.” And we said, “We’re going to cancel all reservations for the week of inauguration.” But I think we learned the lesson a long time ago that we have to take more responsibility because our product is in the real world. And that’s led to us having agreements with more than 1,000 cities around the world.

Molly Wood: I want to ask you about that, actually. Because that has been the other bubbling thing with Airbnb, this relationship with cities and whether Airbnb is partly to blame for the lack of affordable rentals. As you sort of prepare for that part of the business to come back in force, how have you rethought your relationships with cities and housing?

Chesky: I think COVID allowed everyone to take a breather. I think we got a bit of a reset on the relationship with some cities. Cities started approaching us. Some of them actually said they wanted to partner with us to get more demand because, they said, “We have major budget shortfalls now. We have major tourism shortfalls.”

Wood: So you think it’s the kind of reset where cities were like, “Oh, we need you,” as opposed to, “You, Airbnb, have to do more to deal with the question of housing supply”?

Chesky: Maybe not they need us, but they said, “Oh, maybe we can work together.” I feel very optimistic about our ability to have great relationships to cities. And I think the other thing that’s going to happen in travel, people aren’t just going to travel to the same 50 cities anymore. And that has had a way of redistributing travel to more communities. Because primarily, a lot of the conflicts are too many people in one place at the same time.

Wood: You’ve also said that you think this idea of digital nomads could be big — people booking longer-term stays. Do you think that could improve your relationships with cities and neighborhoods too because people are not coming and going so quickly?

Chesky: Yeah, I mean, I think the other trend is our business is becoming less transient. Monthly rentals is one of the fastest-growing parts of our business. But I think the other shift is, stays are going to be longer. And I think there’s going to be this blurring of the line between traveling and living. A lot of people are saying that they don’t live any one place anymore. Or it used to be you live one place, and you go one or two nights for a business meeting and like one or two are vacation. Now, a world where you work from home means a world where you can work from any home.

I think three-day weekends will be every weekend for a lot of people. I think some people will take five-day weekends. I think significantly more people will live in a different house over the summer than the house they currently live in, where they used to live in the same house. I think it’ll be very normal for people to go to a different house for the summer. I mean, it just makes total sense why one would do that. And if you could say, well, how do they afford it? Well, they can rent their house when they’re gone, so you can net it out.

So these things are going to happen. But you’re going to also have people that are just purely nomadic. Maybe not people with families, but retirees and empty nesters or young people, single people, people who can move. I mean, I always had a dream of, what if I could go to a different city every month and live there? This would be superinteresting. Think about all the people you’d meet, all the connections you’d have. By the way, in this new world, you can still stay connected to all the people you used to know. So, I think this is where travel is going. Traveling and living are blurring together.

Wood: In June, you announced an initiative to specifically measure systemic bias on Airbnb through the collection of data. Can you give us a check-in on how that’s working?

Chesky: This is a project called Project Lighthouse. We did it in collaboration with Color of Change, one of the leading civil rights groups in the United States, along with some leading privacy groups. And we are intending to put out reports. We’re going to put out a report later this year.

In 2016, there was a major problem brought to our attention. I remember seeing on Twitter a hashtag trending. That hashtag was #AirbnbWhileBlack. And it was basically people describing experiencing discrimination while trying to book rentals, because you can see people’s photographs on Airbnb. And this became an existential crisis of the company because the opposite of connection or belonging is discrimination or worse. And so, we mobilized the company. We started to try to unpack this problem of how do we reduce bias, and we made a bunch of product improvements based on feedback.

The problem is we weren’t sure what was working or not. And so we said, “It’s hard to change what you can’t measure.” And the problem is a lot of companies don’t know how to measure discrimination because how do you measure discrimination without collecting information about people’s races? And how do you do that online? And how do people consent to doing that? So, we were able to come up with a solution that I felt like the leading privacy groups, from a privacy standpoint, and the leading civil rights group seemed comfortable with. That was really the needle to thread, and we weren’t the experts. We weren’t going to guess what was the right protocol here. And we are in the midst of taking a baseline measurement. So nothing to announce at this moment. But that’s the process.

Wood: And then let’s talk about Experiences. You sort of really quickly spun up these Online Experiences in April, right after everybody kind of went home. Had you been planning that prior to the pandemic? Or was it indeed the quick pop-up that you’ve portrayed it as?

Chesky: No. We rolled it out … and it was way more successful than I had anticipated. I didn’t really have any expectations because it only was built in, I think, 14 days. And one of the things I’m proud about the way we managed the crisis is we were never on defense. We weren’t retrenching. I said, in nature, those things that survive are those things that are adaptable. And so the most adaptable businesses win.

Wood: Was it enough of a bump? Like clearly it wasn’t going to replace all of the lost business, but do you feel like it really rounded out your Experiences offering, which you’ve said could end up being a bigger part of the business than home rentals even?

Chesky: Yeah, absolutely. It’s always hard to know how big stuff can become. The biggest asset in someone’s life is not their home. The biggest asset in your life is probably your time. And so are we always felt we weren’t going to be a service commodity like DoorDash. They do that really well. We’re more on the experiential side, really something that’s differentiated on the hosting standpoint. And the core idea was, when you get into Uber, you get a DoorDash, every one of those was basically the same experience. In fact, you don’t want a different experience, you want the same experience every time. So therefore, individuality is not really, it’s not the point of the service. Ours is really different. We’re not a hotel, our homes were all different. We said, therefore, we really think our core is doing things that are one of a kind at scale. And so it turns out Online Experiences was able to do something that in-person experiences couldn’t do.

Let me give an example. If we have a great experience here in San Francisco, the problem is you have to come to San Francisco to experience it, right? So obviously, people living here can do it. People visiting here can do it. But the vast majority of people … San Francisco has a million people [out of the world’s] 7 billion population. Most people don’t live here. And so what Online Experiences was able to do was is able to allow a host in San Francisco to get demand all over the world instantaneously. We had hosts making hundreds of thousands of dollars a year. It was very remarkable what ended up transpiring. And I think it’s a sign of more innovation to come from Airbnb.

Wood: We’ve been talking a lot actually on the show about how a lot of small businesses basically were able to, or had to try to, access a national and even international market. It sounds like, in a way, you’re talking about potentially evolving into a different kind of platform where people are not just homeowners with a business renting their homes, but small-business people on your platform.

Chesky: I think that we are not going to be limited to homes, and I don’t think we ever thought we would only be limited to homes even before we launched Experiences. I think that what is essential to Airbnb is hosting. You know, the basic idea of Airbnb is more than just saving money. It’s more than just traveling. The idea of Airbnb is really about connection.

Wood: I have one quick wrap-up question for you — full disclosure, fully from my son, who wants to know, do you currently or ever have you had a steak in your pocket?

Chesky: You know, geez, yes. I think he’s referring to a story I told to my company, where when I was in college, I think I was a freshman in college or something like that. I was like really hardcore into like weightlifting and ended up working at a movie theater, and I had to be on this diet where I’d eat steak. And they wouldn’t give me a lot of breaks. So, one time I actually put a steak in my pocket, and it was in a bag, and I was eating it like a beef jerky. I wasn’t preparing to have embarrassing personal confessions …

Wood: I’m so sorry.

Chesky: … on NPR, but as long as that’s the only one I have to do for a while.

Wood: The 14-year-olds are deep, deep sources. Let me tell ya.

Chesky: I know. My God, that’s like investigative journalism.

Wood: Yeah, totally. We don’t mess around here.

Related links: More insight from Molly Wood

Now obviously it’s not all sunshine and roses at Airbnb. While travelers might be returning and new hosts might be finding opportunity, The New York Times had a story last month about the hosts who are still smarting over the huge wave of cancellations when the pandemic first hit and the fact that Airbnb insisted on 100% refunds but didn’t necessarily pay hosts back 100% of what they lost. More people are reportedly turning to other platforms and diversifying their rental options a little bit. Some are exploring direct booking, cutting out the Airbnb middleman completely. And the company has been on a bit of a charm offensive to woo hosts to the platform and keep them there.

Meanwhile, competition is coming. A Barron’s story from last week notes that Booking.com is trying to increase its inventory of private homes to stay in and marketing that fact more aggressively to compete with Airbnb’s name recognition.

One other interesting thing Chesky told me was that Airbnb’s business was able to rebound more quickly than other travel companies in part because it’s not dependent on business travel as much as airlines and hotels. And he thinks business travel is not coming back anytime soon, at least not the way it was, where we’d just hop on a plane for any old reason, or zip to Europe and back to a conference over the span of a few days, or the whole company would come to one city for a meeting.

In Bloomberg on Friday, the head of product and strategy for American Express’ corporate travel group said that is almost certainly true. But they suggest that instead of unnecessary quick trips, companies might prioritize a form of corporate get-together that is more fun and combines experiences with meetings, like the good old days of off-sites. Until then, still just Zoom, I guess.

The future of this podcast starts with you.

Every day, the “Marketplace Tech” team demystifies the digital economy with stories that explore more than just Big Tech. We’re committed to covering topics that matter to you and the world around us, diving deep into how technology intersects with climate change, inequity, and disinformation.

As part of a nonprofit newsroom, we’re counting on listeners like you to keep this public service paywall-free and available to all.

Support “Marketplace Tech” in any amount today and become a partner in our mission.

The team

Molly Wood Host
Michael Lipkin Senior Producer
Stephanie Hughes Producer
Daniel Shin Producer
Jesús Alvarado Associate Producer