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ideas, stories and insights. Preorder your copy of how I built this by visiting guy raz dot com, or how I built this dot com for more details. Hey, everyone, and welcome to how I built this Resilience edition on these episodes were talking with entrepreneurs and business leaders about how they're adapting to these difficult economic times. And on today's show, we're gonna hear from Brian Chesky, the CEO and co founder of Airbnb. Back in 2016 we spoke with Brian's co founder, Joe Gambia, and he told the amazing story of how they founded and built the company. 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 gonna be laid off.

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 strange, live each other, live with each other like that was the hardest thing we were ever going to do. It was like pushing a rock up a hill, and it turned out that tryingto run a company that does travel. Preparing to go public in the middle of pandemic is about it's hard and then doing all via zoom. It was even more difficult, and I think that what people want right now, just more fundamentally, it's 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, you know,

you have to make a conscious effort for it. You know, on the one hand, I'm closer. Toe some people I've ever been in my life, probably closer to my co founders. Joe 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 as a way of making your bubble a little bit smaller. And that's probably what

happened for me. Yeah, You, um you wrote a letter to your employees that was posted publicly, and that letter is was remarkable. It was so transparent. You had to lay off 1/4 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. Um, 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 they were. Resource is to help the employees. Um, kind of walk me through how you how you came toe to write that letter. And, um, how you kind of dealt with that just emotionally.

Yeah, there is no playbook. I don't think to lay people off in. 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 individually and not robotically. You know, when the crisis happened, we felt it in mid March. It was pretty serious. We spent 12 years building Airbnb, and then we lost 80% of business in eight weeks. You know, we're looked one of the success stories,

right? And then suddenly, eight weeks, there's, you know, all sorts of concerns. Those articles will ever be survive. I never thought I'd read an article like that, and we made a lot of hard decisions. We first cut enormous stamina cost. We cut over a $1,000,000,000 of planned marketing spent. Then we quickly raised $2 billion. It's not easy to raise $2 billion. It's more difficult to raise $2 billion from your travel company. It's a pandemic and you've lost 80% your business on our gate weeks that people get nervous. Thankfully,

we had some great investors step up, but we had to do that deal and that was like over the course of 72 hours, still, like get that deal done. It was the fastest deal. I think by certainly I've ever done and they've ever done so before that lay off even happened. I wrote a couple of principles and I said, I we only have a handful of stakeholders. We have to first make sure that we act quickly and with all stakeholders in mind, we're gonna be remembered probably for how we handle this crisis. Andy Grove, This famous entrepreneurs said bad comes destroyed by a crisis. Good companies, survival crisis and great companies thrive or are defined by a crisis. I said we're not gonna be the kind of company be destroyed by this, so we're gonna obviously try to take care of each of our stairs stakeholders and when we got to the employees,

we basically had exhausted options having raised $2 billion became the conclusion that we would have to do lay off when we confronted too hard. Truth, the hard truth Number one was this, that we did not know when trouble would return. Nobody did. And the second thing we knew is that when travel would return, it would look fundamentally different than the travel before the pan dammit. And so our business would have to look different and we'd have toe 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 as generous as we possibly could be in 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 14 weeks severance puts a week for your service. We felt like, Well,

this is a health crisis. People need health insurance. And so we made sure that everyone had at least one year of health insurance even after never getting laid off. One of the things that I'm most proud of that. Our team came up with 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 font do job outplacement for the people being laid off. Maybe we could basically be an outplacement team to help them find jobs in. The last thing I'll say is writing the letter. I just really want 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 a 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. 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. Yeah, 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 toe a layoff, and it's kind of something very two 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. I mean, 1900 employees had to be laid off, but you still have a large workforce. How are you making sure that you're keeping morale among the people who who are still working at Airbnb?

Oh, it's so hard. I was warned ahead of time that not only is the 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 a Mac and Scott like this. You know what? The camera gets his little green light next to it, that I'm gonna stare into that green light every week. 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 in 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 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 that love that's come through the surface. I mean, you study only now in a crisis were 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 is essential is the relationships that we have with people. That's what we have in the day.

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, you and your partner sent out 20 emails to investors to invest and not a single one. Invest in your company. You had several setbacks trying to stand up Airbnb in 8 4009 At one point you made cereal a box of cereal to get attention, and I think you raise $20,000 with the sale of the cereal boxes.

Yeah, 20 or 30,000. It was, Yeah, something like that, Joe told the story. We had to res collectible breakfast CEO. We were air bed and breakfast, so we said, Well, let's do collectible breakfast CEO for the Democratic Republican National Conventions in 2008 Joe and I, we made these Obama owes. There were Cheerios and Captain McCain's a maverick and every bite and at one point were like, literally hot, glowing the cereal boxes in our kitchen. I remember wondering a wonder if Mark Zuckerberg ever had, like,

hot gluing cereal boxes in his kitchen, start Facebook. Of course, the answer is not. This was an ominous sign, but kind

of we lived through. So I mean, clearly, there were times in the family 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 of the cereal box? Now what are some of the things that you are doing is a business to get creative and to think about building resilience,

Win the pandemic hit. We said we're going to be decisive. Felt like if I was a captain of a ship. Felt like suddenly something hit the side of the ship and yet to move very, very quickly. And so it was kind of all hands on deck bursting is we had over. We had customers cancel over $1 billion of reservations. Now, this would already have been hard, except for the fact that this is a $1,000,000,000 that our host were expecting. And these people, many of them depend on to pay the rent or mortgage that we had a huge predicament. What do you do when a 1,000,000,000 people want a $1,000,000,000 or refunds and another group of people tell you, wolf, you don't get that $1,000,000,000 then we're gonna be in a really bad spot. Well, that's a really bad No.

One situation. It is not our money. We just hold the money. What we decided to do is we refund. It all stays related to the pandemic where people need to cancellation in travel. But then this causes a huge shortfall with their host and were bleeding cash at this point, like and have never in our history have we bled cash. In fact, we have more money in the bank. Do we raise before the pandemic? Suddenly, we're losing a lot of money. We took 1/4 of a $1,000,000,000 to under $50 million we sent it to our host, Just didn't loan it, just sent it to host. 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 $1,000,000 of their own money through like things like parks and travel credits to give to our host and Joanie. And I said, Well, let's have a zero to that. We got that $10 million created a little special grant program. Then suddenly we noticed that there were nurses, AM teas, and doctors and they were going into hot zones and eat place to stay. Hosts are telling it Hate. We can host these people in we Carter. This program called frontline States to provide housing for front line workers. Could we have more than 100,000 host 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 dropped by 80% and eight weeks, and we thought, Well, this is gonna be a really, really long road it ISS. But something remarkable happened. Businesses started seeing glimmers of hope in recovery and ended up happening is people weren't getting on planes, 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 gonna work from home when I just work for many home, right and they get that a home on Airbnb So it's a totally different world that I think I mean, that may be the most fundamental change that I see in our world. That's gonna 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 month there and you're seeing not only population redistribution, ghosting travel redistribution, that all these new communities are really welcoming guest, and they're gonna welcome them for a longer period of time. That is the fundamental change in our industry.

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. Support for this podcast and the following message come from Hub Spot Complex. Enterprise software shouldn't get in the way of doing good work. Hub spots marketing hub enterprise makes it incredibly easy to do powerful things. Launch campaigns quickly from a user friendly interface, improve performance using AI and attribute revenue to every marketing activity. With Hub Spot, you can spend more time delighting your customers and less time managing software. Discover all the new features in marketing Hub Enterprise at hub spot dot com. 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 that people are traveling again. They're just not getting on planes and they're staying much closer to home.

People are gonna, instead of traveling to the same 20 cities, going to same hotel districts there really crowded and then standing in line to get their selfie photo and so same landmarks to put it on Instagram. See? 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 we're gonna travel outdoors, For example, there's 400 national parks United States most Americans live within a tank of gas in the 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 re connection, you know, maybe this is a time re connection to family. This also could be a time of re connection with nature and the outdoors for a lot of people. I mean, we're releasing huge growth cabins, Airstreams, camping. This is that's the kind of travel that you're going to 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.

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

Totally were totally looked out for the

eso. Is there sort of a future scenario where Airbnb more aggressively gets into the business of RVs?

Oh, yeah, 100%. 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. Were probably one of the largest, largest RV rental companies in the world. It's nice. They're not our visas, the communities. But yeah, I'm sure thousands and thousands of Arby's we have thousands of tree houses, thousands of Airstreams, thousands of years, thousands of houseboats.

And I think that people are discovering unique, one of a kind. They want things that a little more intimate, more local in one of the cool things about Airbnb is like the most insane space that you ever imagine. These a frame homes or these like really interesting architectural gems. They're saying, I wanna go somewhere with an interesting home, this home in the middle of blank and it's really cool looking. And so you're starting to see some really interesting homes and Airbnb being booked there. There is a giant boot that you can sleep in in New Zealand. Somebody built a giant boot like a 15 foot high booth. There is a dog that you sleep in. It's called the Dog Bark Park being be 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. Yeah, I mean, look, all of these examples are awesome and exciting. I'm this a question. I love this question from Jim P. Have you guys considered having a category of like houses suitable for work from home or quarantined homes? Like like a little category for those things.

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 things we now do is, for example, we Your Internet speed never met. It mattered more in your life that if that's right now, right, Like one of the things is making sure that people know the WiFi speed. So over 1000 host of already updated the speed of their WiFi on their Airbnb is who want to get hundreds of thousands. Host just update. What kind of Internet do you have with the speed of your WiFi? What's the buffering rate? Just get some people like they have worked where they need to rely on it. And then we're gonna ask, like in reviews, to confirm,

like WiFi speed. So really basic things like that that you kind of took for granted before we asked, Do you have life? I now It's like, Well, how fast is the WiFi? Because it really matters. People

I have to assume, like with the hotel industry travel industry, a significant part of your business does come from business travelers, right? And presumably your business is still significantly lower this year, this time this year than it was last year. It's not. It's not. Not significantly. Wow, So you're seeing you're already seeing sort of similar numbers right now

than you were last year, so drop by about 80%. And I mean, you know, nobody knows that this is pent up demand or not, but no, we're around. Last year's levels all around the world are averaged out. You know, Latin America in Asia are lower. North America and Europe

are higher. Wow. And that's because people are getting on planes

mixture 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 the hotel only works with density, right? You need too much rooms and efficiency, and so people are basically traveling and going to small communities while it turns out, that's actually a really good use case for a home, and we try to be very responsible. We work, look, governments tohave reopening protocols we hired or brought on the foreign minister to John United States back Murthy create cleaning protocol and then people don't want to be in crowds, and they perceive Airbnb is a safer option.

Yeah, we're getting questions about that from from our listeners. I mean, in terms of cleanliness, How do you How do you ensure that the hosts are keeping their properties clean? Is this a question from Mary Elliott Coughlin, Our by Facebook? How do you guys make sure that the hosts are really sanitizing

their homes? Yes, this is the whole program that we're doing that we'd launch this thing called the Enhanced Cleaning Protocol. We asked hosts to go through basically like an online course that 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's is 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 things, and now we're working on other things, like updating review system. So when people stay, they can rate the corniness into the host seems very responsive. And then we're gonna be working on ways to essentially verify the standard of Communist. Well, that's a little bit harder problem. But there's a whole system that we're working on,

you know, to this point of going public. I mean, is that on the back burner now of taking the come company

public? No, I've When this interview's over, I will be resuming work on that. I, uh, to go public, you've got to write this securities document called In S One. And it's like, Ah, 300 page page Turner. It's It will not. It will not compete with your favorite American literature as the Sunday night reading, but we're gonna file it late march we put on the shelf and recently we've been dusting it off, you know, and and get updated because the business has changed. So you've got got kind of right it more different or differently.

So that's what I'm doing, and we don't know when will be public. But I basically said we'll be ready this year if the markets ready for us. If the markets not ready, we'll be ready when they're

Brian. Um, you know, when you think about where your business is gonna be in five years and 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 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 in your leadership in your company during this time period,

you know you can learn a lot about somebody in a crisis, and I 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 that probably feel alone. I bet you everyone's less alone. They think they are. But we're actually to get 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 then you think you dio I mean, most people listening do have connections,

and we just need toe remind ourselves of them and reach out to them. And the second thing I've learned is to kind of follow your your own heart, eminence tuition. You know, before a pandemic Airbnb was stretched. Then we're sprawling. We're going into all these businesses, you know, just kind of feeling. Pressure of trying toe 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 right out the principles of what you stand for and half faith knowing if you do the right thing,

that it's going to sort itself out. And by the way, what out? What's your alternative at this point, anyway? And so I started realizing that, like we need to get back to the basics when you 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 court truth, that that's what we're going to focus on, we're not alone. And we all have something the world needs. We need to focus on that. That's when we take

out of this. Yes, indeed. Brian Chesky, Thank you so much for joining us,

Thank you very much.

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 dot com slash how I built this, and if you want to see all of our past live interviews, you confined them there or at YouTube dot com slash NPR. If you want to find out more about that, how I built this resilience, Siri's or other virtual NPR events, you can go to NPR presents dot org's. This episode was produced by Candice Limb with help from Will Mitchell, Tyra Lockhart, Matt Adams, Jonah Cap Adona, John Isabella, Julia Carney, Niva 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 from NPR.