Airbnb (ABNB)’s CEO and co-founder Brian Chesky feels ‘really lucky’ to take his company to the public with a potential $47 billion valuation. “I feel really lucky” proclaimed Chesky in an interview with Bloomberg. “Sometimes in life, you appreciate something when you can face losing it. If I did not appreciate it before this year, having stared into what felt like an abyss for travel and to kind of rally together with thousands of people and rebuild the company from the ground up is something that I think made us stronger than it ever was before the pandemic.” Brian stated that he feels incredibly fortunate and thankful to his employees, the guests, hosts, and the community as a whole. “This is a very humbling period for me.” Aside from being Airbnb’s CEO, Brian on the other hand is a businessman and an industrial designer who was proclaimed as one of Time’s list of “100 Most Influential People of 2015”.
Airbnb Inc. is an American online vacation rental company that is based in America particularly in San Francisco, California. Its name was coined from “Air Mattress B&B”. Basically, Airbnb maintains and hosts a marketplace from homes to hotels and it also lets other people lease their properties like a garage or some spare rooms to guests. The commission that Airbnb takes is 3% of every booking from hosts and 6%-12% from guests. Airbnb is currently accessible to more than 81,000 cities and around 191 countries globally. Compared to the conventional hotels and rental properties, Airbnb is considered to be cheap because primarily, the commodities they offer are in residential areas so they are not obliged to pay taxes unlike what hotels do.
The 39-year-old Brian Chesky, when asked why they chose to go public in the time of a pandemic replied, “We were prepared to go public this year and when the pandemic broke out, we put the S-1 on hold and I could never have imagined us going public this year.” He said that something ‘pretty remarkable’ happened when people got locked in their homes and they wanted to get outside but did not want to travel far so they started staying in Airbnb. “At that moment, it became really clear that this business model is incredibly resilient.” When the pandemic just came out, when travel was halted, the company was on the verge of losing everything. This ‘pretty remarkable’ event that happened was able to convince Brian that their hosts can adapt to any changing behaviors and that they actually have a shot of continuing their original plan of going public in 2020 despite the pandemic.
Airbnb’s stock began trading last December 10, 2020. It opened at $146 per share which beats the IPO price at $68 and it is said to be the “Largest Tech IPO” of the year. The company was able to raise about $3.5 billion during its Initial Public Offering. Brian said that they raised money through debt financing that priced them just around 30 dollars that is why he was really shocked about how well the IPO ended up.
Airbnb is still on a very long journey and that they are going to be more focused on doing their job. Brian then noted, “I’m very humbled.” referring to this new milestone of their company. “This is our opportunity to bring shareholders into this company. The higher the stock price, the higher the expectations, the harder we’re going to be working”.
As the Covid outbreak surges, health and safety would be the company’s primary focus for the next few months. The company took 250 million dollars out of its balance sheet and gave refunds to more than a billion dollars worth of customer deposits. Brian proclaimed that they will always make their services as ‘gold standard’ by instituting an enhanced cleaning protocol while currently working with the former U.S. Surgeon General Dr. Vivek Murthy who co-chairs the Covid-19 task force under the Biden administration. Brian assured that they are trying to work with every city and every government with their best efforts to make sure that people will travel responsibly.
“As long as companies are willing to adapt, they are going to be fine”. Brian said the world that we knew before the pandemic is over. He said their customers are telling them that they want things that are more intimate or a little more private. “They obviously don’t want to be in crowded spaces. They want to make sure the right precautions are handled,”. Brian thinks that more people may actually travel just in nearby areas during the pandemic and this can be a huge opportunity for any travel company that wants to adapt to change.
Some analysts are saying that Airbnb is only a good bet for the short term but Brian responded by saying, “I’m 39 years old, I started this company when I was 26– We created this new category of travel. It seemed like a kind of crazy idea and it just kept growing and growing and growing,” Brian stated that he is going to let all the prospective investor decide who they want to bet for the short term or long term. “I want people to know that we’re in this for the long term and the long term for me is measured in terms of decades not years.”
Meanwhile, the company considers party houses as a ‘big issue’ especially now during the pandemic. “We instituted a party ban.” said the CEO adding that they do not allow people at the age of 25 to book last-minute for a single night in the city. They also increased their risk thresholds and elevated the visibility of their neighbor hotlines. “As the risks change and safety matters evolve, we’ll be there and we want to always be one step ahead.” he mentioned.
“In life, timing is everything.” Brian thought this year would be a breakout year for experiences but there’s no ton of experiences happening because of the current restrictions in the different countries and cities they serve. “Experiences are like the purest manifestation of Airbnb,” said Brian while he proclaimed that they have now re-opened experiences in countries all over the world. According to him, there is a connection between the host and the experience they provide, that if Airbnb is about hosting, then experience is about the host. Furthermore, Brian also reported that 82 percent of the time, their customers leave a review and gives a five-star review, in addition to that, 90 percent of the time, their customers leave a review ‘and‘ experience and also give a five-star rating.
After the successful turn around of their listing, Airbnb was able to raise a lot of money. It can be noted that the company pulled back from several different initiatives when the pandemic started but with all the funds on the table, will Airbnb pick back all the efforts left unattended? “When I was at college, a professor once told me, ‘Brian, you can do everything you want in your life, just not all at the same time.’– and it’s very tempting when you initially had success to start pursuing many things at the same time. So we are not going to lose our focus.” The CEO noted that they are going to be very thoughtful and extremely disciplined in order to have a higher ROI standard and that the opportunities they left behind will always be there for them.
Branded as one of the ‘little guys’, Airbnb’s CEO strongly disagree to be tagged as one. “We’re not as small as we were when we are starting Airbnb.” He stated that there are certain risks to compete with big companies like Google, Amazon, and even Facebook but he will leave it up to others to decide about how they view his company.
Despite their recent achievement, Brian said that there isn’t going to be a ‘big champagne core popping experience with confetti’. “I’m here in my house and though there’s a lot of exuberance, I also want to just acknowledge there’s still a lot of people suffering in the world.”. According to Brian, 50% of their hosts depend on the income they make to pay their rent. Airbnb serves a lot of stakeholders including people that are struggling every day especially today in the midst of a pandemic.
“Cities around the world are telling us that they see Airbnb as a solution to a lot of their challenges.” The CEO mentioned that there are situations where many people are struggling to pay their house’s monthly mortgage and they took Airbnb as an opportunity to at least help them in a way.
Brian then stated that they had agreements with hundreds of cities and they now collect billions of dollars of hotel occupancy tax. He said that they already have strong relationships with most of the cities they serve and they do welcome an even stronger relationship with as many cities as possible.
Airbnb was able to collect a huge amount of $3.5 billion during its IPO. Asked about how they are going to spend the amount, Brian responded, “We’re not looking to spend all the $3.5 billion we just raised. We made some very difficult decisions on cost-cutting early this year(2020) and I said there are two reasons we’re doing this.” The first reason according to him is that ‘we are still in a very bad storm’ and the second is that ‘nobody knows how long the storm’s going to exist’. “We have to be adaptable. I like to hope for the best and plan for the worse.” he uttered.
“We are incredibly ambitious. We are going to be looking at lots of new opportunities but we’re also going to try to have some sensible caution.” he said while also noting that they need to do these things especially today, during this unique once in a generation period where there’s a lot of uncertainties. On top of that, he mentioned how timely is the thing that his dad used to tell him, “Things are never as good as they seem and they’re not as bad as they seem– Life has a way of balancing each other out.”.