The Airbnb IPO on December 9 was a great success, with the share price more than doubling on the first day of trading. But back in April, the company’s very survival was at stake. Revenue was down 80 percent, and there were over $1 billion in cancellations. Decisive action by CEO Brian Chesky saved the company and brought it through to its glorious IPO. (ABNB: NASDAQ).
At only 39, Chesky is experienced beyond his years. Decisiveness and vision helped him start Airbnb. But his humility to learn from his mistakes and take advice from others helped him grow into the strong CEO he is today. It surprises even himself.
“I never met a CEO or an entrepreneur growing up, so I never dreamed of being one.”
Chesky grew up in Niskayuna, New York. His parents were both social workers.
After high school, he studied industrial design at Rhode Island School of Design. It was here that he met future Airbnb co-founder Joe Gebbia.
Two years after working as an industrial designer in LA, Chesky moved to San Francisco with Gebbia to start a design company.
The rest is history. Renting out three air mattresses for visitors to a design conference quickly became “AirBedandBreakfast.com.” And eventually the Airbnb we have today.
Chesky and Gebbia saw a business opportunity and acted decisively.
But along the way, Chesky has made many mistakes. But he had the humility to learn from each one.
For example, in 2011, Airbnb had one of its first real tests. Guests trashed a host’s apartment. They also stole her valuables and her identity. When Airbnb failed to respond for 14 hours and failed to help the host, there was a publicity storm.
Everyone was telling Chesky to ignore it. But in the end, he decided that he had a moral obligation to help the host and protect all hosts in the future. He provided her with $50K to cover her loss and created a new insurance scheme for hosts. He also apologized.
“If you can step back and have humility, I think you can solve a lot more problems.”
Chesky has also been humble enough to hire people smarter than himself and to ask for advice.
In 2013, Chesky struck a friendship with successful boutique hotel entrepreneur Chip Conley. Conely had made his money with his “Joi De Vivre” hotels and was now enjoying a jet setting retirement. But after much persuasion, Chesky convinced him to work for Airbnb as a special advisor.
From their collaboration, Airbnb developed the nine hospitality standards that it uses today. This includes cleanliness and instant bookings.
Chesky realized that even though he was a disruptor, he had much to learn from the traditional hospitality industry.
Chesky also counts Jeff Bezos, Sheryl Sandberg, and John Donahoe as mentors.
“We need to have mentors. I think I’ve always been pretty shameless about seeking out people much smarter and more experienced than myself from the very beginning.”
Chesky’s decisiveness has been key to Airbnb’s survival of the pandemic and its successful IPO.
In April, after seeing the impact of the virus on Airbnb’s Chinese business and after talking to former President Barack Obama, Chesky called an emergency board meeting. He set out four key objectives:
1. Help stakeholders – including a $250m relief fund for hosts.
2. Cut costs – he laid off 25 percent of full-time staff but provided them with a generous severance package.
3. Raise money – he was able to raise $2bn (mostly debt) to provide extra liquidity
4. Diversify the business – online experiences were launched.
Standing on this side of the IPO, it sure looks like Chesky’s decisiveness has paid off.
“I think we’re a better company because of a lot of the changes we made.”
In the first nine months of 2020, Airbnb has brought in $2.5bn in revenue. In the same period last year, it brought in $3.7bn. 2020 revenue will break the growing revenue trend (see chart below), but Airbnb is looking much stronger than it did back in April and March.
Airbnb began trading on December 10. The IPO price was $68, but it closed at $145 on the first trading day.
Since then, a small downturn had given way to a shooting star and three green soldiers (see chart below). ABNB may be set for a little run, particularly as the good news on vaccines continues to roll out.