this is out of the crisis. I'm Erik Reece. So you want to be an entrepreneur, huh? Me, too. And although it looks fun and exciting in the movies and in the fawning business profiles, there are these moments when it's excruciatingly difficult. I've had plenty companies fail. That's part of the entrepreneur condition. It works. What if you get product market fit beyond your wildest dreams To become a global company? 13,000 employees Iran Track toe have maybe the most anticipated public offering ever. Certainly since the financial crisis. You're one of the largest private companies in the world, and then the walls come crashing down. First the news out of China,

then Europe, then here in the US one by one, the markets in which you operate shutdown. And it's not just a financial panic crisis when capital is difficult to raise or mass unemployment makes the economy shutter. If you're in the travel business, a global pandemic is an existential threat, a complete collapse of revenue that simultaneously affect your employees and your customers, your partners, your investors, everyone all at once and all the news is bad so that I have known Brian Chesky for a long time way have been allies and comrades in arms, trying to define what it means to be a company in the 21st century. He has a unique business philosophy. Broadly shared prosperity, decades not quarters, all stakeholders, not just short term investors,

people, not just metrics, because these principles conceive an abstract. I asked Brian to take us on a journey behind the scenes what it was really like running a company as large as Airbnb through this crisis, thes air ideas about what the structure of a company has to be to institutionalise its intentions so that the next leaders next employees Next board will be true to that philosophy. Being long term, Having a multi stakeholder approach doesn't mean you'll never have to make tough choices. Actions speak louder than words thistles when it matters most. It's not just about what you do, but how you do. And the broader philosophy that those actions represent the acid test is not that you'll never do. Loathe test is if times are difficult, how do you treat people? Do you treat your employees like stakeholders, your customers and your investors like partners? Do you show people compassion.

You help employees who are laid off find their next job. Those are the actions that define a company in a crisis. You'll hear the paradox of all crisis response, which is that although you must take action urgently, decisively and immediately, action to take will resonate for a very long time, and that is the challenge of running 21st century company. And some companies are really showing us with that. Some companies talked a big game before and have gone right back to the old way, while others have set a whole new bar for how to handle these kinds of challenges. One of the clear takeaways for me has been that a crisis reveals actions that should have been taken all along. I think everyone listening those Airbnb It is one of the most iconic 20 per century brands. Almost all of us have been customers. Many of us have been hosts on the platform, and until a few weeks ago it was indeed the most successful private company in the world. I have been working with Brian to define what a 21st century company looks like.

His conversation is one of his first since the crisis struck. And in the conversation, you can really hear the impact these weeks have had on him. It's a wide ranging discussion, so much so that we had to split it into two parts. In this first part, we talk about the chronology of what has happened to Airbnb, the impacts the pandemic has had on their business and the steps the emergency measures the company was required to take. I think every founder, every CEO, every leader could learn something could take heart from Brian's example. And I hope they will. I hope you will. So you wanted to be an entrepreneur, huh? He is what it actually looks like. Here's what it actually feels like in the eye of the storm. Here's my conversation with Brian Chesky.

I'm Brian Chesky, co founder, CEO, and had a community at Airbnb.

Hey, man, how you doing?

I am Ah, I'm doing I'm doing I'm doing I'm doing better. Was has been a It's been a harrowing eight weeks or so, culminating in last week, but I'm doing I'm doing well

now. I'm glad to hear it, you know, before we get into the service stressful for work just how are you? How's your family? Parents hanging in? OK,

yeah. I mean, I would say I've, you know, I've never in my life. Have I been around so few other humans, for sure. And you know, I've lived in cities for much of my life, and, you know, when you're around people lot, they kind of become ubiquitous, and you kind of take for granted, and you don't really want to deal people. I'm from New York, upstate New York,

but you have New York City, and people just kind of they don't really look at people don't really smile and trying to do my best to stay connected with my parents. My mom actually is out here, so that's great. She's been kind of visiting me, and so she's around. So that's been really cool. Um, and just tryingto, you know, try to just try to stay connected as much as I can.

You know, you're not like a lot of other tech folks that, you know, if I'm maybe just not to caricature, but a little more head centered a little more, you know, hyper rational.

Yeah. I mean, I think I think Silicon Valley historically I think, I think after So everyone's got ahead. Everyone's got a heart. I think most people in Silicon Valley exercise their heads and sometimes the heart and the compassion it's it's the other part of us. Um, I think, you know, I really rely on human contact and I get energy from other people. And so I think it's could be hard to derive energy when you're not physically around people. So you really have toe have a clear sense of purpose and you gotta like work to stay connected. You don't just bump into people. You've gotta, like, make an effort. And I think that's been that's been hard.

And, you know, the other thing has been really hard for me. Um, I mean, these last eight weeks, I went from a me. First of all I I've gone through just some. We've we've gone through a lot. I mean, starting with our guest. And so we had to adjudicate like billions of dollars with cancellations. But then that meant that we had to override cancellation policies for host. These were host that depend on their meat, their livelihood, And so I have to read like hundreds and hundreds of emails of the pain and suffering they're going through.

And then you've got to deal with the anxieties of other people just worrying about, um, you know, the livelihood of a company, and is it going to endure and thrive in the way we always thought it would? And if that's not enough, then the people, you're kind of most direct responsible for your own employees. And last week I had to say goodbye to 1900 people, and these were people that we've spent so much time to hire. Like we we went through hundreds of thousands of resumes, the higher those 1900 people, and we do so much to bring him in. And I have to say goodbye to them. You know, I'd say that was the hardest part.

It's not just the deprivation of human contact in my physical environment. It's just the pain, the suffering that so many people go go through in this harrowing of times, and to be kind of on that journey with them and to try to do everything you can to support them. That's been really hard. So in that sense, it's been certainly one of the most emotional eight or nine weeks of my life. You can imagine what could go wrong. You're just running a travel company that was preparing to go public in the middle of a pandemic. The wealthiest won't survive. The most resilient will survive. I think this is actually a law of mother Nature, those that a resilient survive, and that is a basic principle of evolution. I think it's also true of companies in crisis. And so it's been really important that we are resilient,

adaptable. We don't fight reality, we just deal with it and those that are nimble, those that can let go of the past. And the things that are, um, you know, immediately changed, I think are going to survive. And that's what I've been trying to do, just, you know, have compassion. Remember that there are decades. Nothing happens there. Weeks decades happen,

and these in these weeks I will probably remember for decades, so I better think of them as defining periods and be really, really thoughtful about the decisions. I make the impact I have in the same time. You gotta move quickly. You can't spend weeks making a decision So that's what the spin for me the last nine weeks,

one of things my parents would always say to me is that a crisis doesn't form character crisis reveals character. So in some ways, when you're tested in this way, you know, we talked about this a bunch, you know, this is this is the moment that people are going to remember how you responded, Howard. You reacted that they're gonna remember that, you know, for the rest of your corporate life

for every Yeah, forever. Yeah,

well, indelible part of your reputation. And this is laying the foundation for whatever the future

of this company is gonna be. You know, Andy Grove? Um, you know it. You obviously know him. And people listening probably remember him. He was this co founder of Intel, and he probably wrote some of the very best books on modern management. He wrote a book called High Output Management, and he had a saying They think the sinks went something like, I won't quote exactly. Bad companies are destroyed by crisis. Good company, survivor crisis. But great companies are defined by a crisis. And I think this is a very defining our for for all of us.

Really? And the other thing I'd say is a crisis can really give you clarity like nothing else, right? Doesn't it feel like in a crisis, suddenly like the world flashes before your eyes and you see what is truly important? And the other thing you you learn, Eric, that I've noticed is you learn who people really are. And I've learned more about who people really are around me Now, in the last eight with nine weeks, I probably have in the last handful years. And the other thing is, if you could learn a lot about a person in a crisis, then maybe it's true. Thank you. Learn a lot about yourself in a crisis.

And I gotta tell you, I probably learned more about myself in these eight or nine weeks, and I ever have because if you would have told me I would be facing this predicament, how I'd respond, what I would do, I couldn't tell you. And I've learned a lot about myself. I guess what I've learned is first of all thing first thing I've learned is I can handle a lot of pain. I didn't know I could and honestly, like this has been crazy. And I answered, I could probably handle more and on. And the other thing I learned is I have Ah, I've have deep care for people and I think it's sometimes easy to take people around you and the things you have for granted. You know, 9 10 weeks ago,

I thought I had everything. It is kind of weird because now I suddenly feel like I have more than ever. Did you know, it's just a perspective, you know, and I I I feel more love and support than I ever have. I think when you're going through a crisis and people know they that they reveal themselves and we kind of saw this coming. But the problem is like it's super hard toe like grapple in your mind like exponential

growth. Yeah, humans are not good at this.

And we're also humans are not good at forecasting. We're creating a mental model. Ratzmann has never happened before because we tend dio apply your past life experiences towards things that are happening. We say, Oh, this this is like that thing. Well, what happens if this thing is not like anything ever before then Suddenly it takes your legs out from me and you can't see it. And so we started seeing this thing, um, sweep China. Our China business really affected. So we kind of knew at this point, if it's spread, it would be really bad. And then we see it hit Europe. And then suddenly,

for the first time, this is even before it with United States, our growth rate went below one. Acts that basically means you're on a your of your base is shrinking. And for a company in Silicon Valley to be lower than you were there before, it's like, you know, just just never happens. Heard of Comey's that are smaller the year before. Don't usually ever get bigger again. It's a bad situation.

That was the first time you had ever

had that experience, ever. I mean, I remember I remember texting a couple of my board members, and he's saying, I'm now texting you send to you attacks because of the first time in 11 years. We're now smaller than we were the year before, and that hasn't happened since 2009. We launched in late 2008 and so we were literally never down, and suddenly and it was it was that week. It was this first or second week in March, and it really hit me that day. The MBA season was canceled, and then that led to a flurry of other sports cancellations and establishments being canceled. It just felt like that week was a domino effect.

Yeah, everything just came apart that after that day

in Europe, was already

being locked up. Were you watching you? Did you see that clip of Mark Cuban? His face is they gave him the news. You're sitting courtside?

Yeah, his face. And like, they sent all the players home. And I actually remember that on TV, and I watch a lot TV. But I somehow was there when that happened. And that was the moment it dawned on me. And it certainly occurred to me, um, that it would affect every industry. Um, you know, kind of I occurred to me. My mental model was that it would affect every industry by, um but it also occurred to me that would affect travel first. I'm not sure it's It's so much a travel be most affected,

as it would be first affected, and I think there's a downstream effects. They're gonna have consequences on industries that are like ripples and water for years to come. But we all kind of knew were the tip of the spear because, like the moment people stop moving travel stops and it was amazing how global travel was halted. And, I mean, maybe the only other wake up call is I had a I remember having a a regular phone call. I have kind of regular check ins. I was talking about some plans I had for a launch in June, and he was I think this is early March and it was gonna be a big press event in, like, a theater. And he's like, Brian, I don't think you're gonna have your event in June and he kind of gave me a little bit of a reality check.

I think it was a little close of the situation, and that was maybe the second moment it dawned on me, and I was like, Oh, man,

that was gonna be a pretty

cool event. Yeah, we had, like, all sorts of cool stuff that is now all gonna hopefully come out and you and I were talking about some cool stuff and it was gonna be June 4th. Actually, it's kind of crazy to think, because it's like, What is it now? Like, three

weeks. We're almost there. Yeah, I can believe it.

And I Honestly, I kind of thought like the second half of my year was gonna be crazy, right? We're going to launch in June and you know, we're gonna go public and all this crazy stuff, and I never thought it would hit me much sooner. I was not prepared for a march and April unlike any I've ever experienced.

So what were some of the first things that you had to do? You talked about how important it is to act decisively and immediately, even though it's painful, walk us through kind of the stuff that unfolded once you realized the severity that this is gonna have.

I've been through a handful of crisis before

air being really was founded during ah global recession.

Airbnb was founded during the Goldbergs session. We were founded because of a crisis. And I remember when the crisis first started essay didn't kill us then and it's not gonna kill us now. And when the crisis, when it first appeared to be a crisis. The first thing you do in crisis you to increase your communication by two or three times. You've got to be very present, very decisive. You have to communicate. And so the first thing I did is I set up a daily war room for my executive team. We used to meet every week. We now met every day and our board we used to meet every quarter. Now we met every Sunday. So we did a Sunday meeting and in my first board meeting, um, I basically establish a bunch of principles. I've learned that in a crisis you need to establish principles.

Now, what is most important to you? What do you optimizing for? Because a lot of times people argue because they're arguing about different underlying motivations. And so it's really important that before you just argue points, you argue principles, given example, I row. Actually, I'll give you six. I wrote six of them. The first principle was be decisive. That was the number one thing you could do in a crisis to be decisive. The worst decision in a crisis is no decision it's almost always. And in a crisis, if you make the wrong decision,

you can make you can correct it with a different decision. Sometimes they're one way doors be decisive. The second was preserved cash. We knew cash was oxygen and altitude. It was losing quickly. And so we needed to preserve cash. That man, of course, initially raising money and cutting costs. The third principle was act with all stakeholders in mind. You know, when people usually make bad decisions and when I say bad, like not good decisions were kind of like evil. Or, you know, whatever the word is for like,

didn't do the right thing. Usually you made a decision for one steak, all at the expense of the other, maybe at the kind of egregious detriment of the other, without having thought about them. Just think about all your stakeholders that mean you're always gonna be balanced the next ways. Let's emerge as, um, you know, let's emerge on the right side of history, you know, don't emerges. Villains emergence. Merge as you know, people that helped do the right thing. So I said,

people are gonna remember this period for years, decades, right? you could be all sorts of things written about this. And if not, that's not to see the world will remember us. But for anyone who does, I want them to remember that we did the right thing and I said, That's really important to me. That's number four Number five. I said Win play to win the next travel season, I said, Travel is going to come back and when it does, we need to be back first play to win the next travel season and finally don't trade in the future. I know in a crisis you have to make you in a weird way up in a crisis, you have to be more short term than ever.

You're more. You're more present than ever. You can Onley think a few days ahead. In some ways, you can predict the world next week. And the other hand, you have to be almost more long term than ever because you're about to make a series of decisions that are gonna define your legacy for years that are gonna kind of leavin marks. You know, these indelible marks for a really, really long time.

Did it feel like you were found in the company all

over. Yeah, I literally had a meeting today because, you know, we did a layoff of 1000 under people last week, and I told this is the first team meeting I had After everyone left on most time left, I said, This is almost like a second founding. It's a new chapter. But if you ever felt that I told you that you ever fell like you join something that was built before you Now you're gonna feel like you're building with us because we are in rebuilding phase and we're gonna need to come back in and and And you're gonna help us write this story. And so that's that. Those were my principles, and I and then I I even wrote, like, you know, who are priority audiences were I said, like,

you know, we need to prioritize the company's viability, you know, our best host, our very best employees. And I said, and then every meeting I had with the board I said, We have to do four things. We have to manage your stakeholders, raise money, diversify our business and cut costs. Every single meeting I had, I started with we're here today because we have to manage the stakeholders. We have to raise money. We diversify business, cut costs,

Sometimes in a crisis. You just have to, like, write down what's truly important, repeat it and be unwavering about it. And you have to have a really clear, simple thinking.

You know, one of things that I think is interesting about that is you know, I don't want it to sound like you just discovered being multi stakeholder in this crisis. That's a topic that you and I have been talking about gosh for several years now. And I wonder, like before this crisis hit all of the sudden, being multi stakeholder was like, really in vogue. And you're like talking about it at Davos and all of a sudden

signed was led job. Those things this year was like multi stakeholder company. Yeah,

And look, you know, the crisis has made extremely clear who was serious about that and who just thought it would be a fun thing to, you know, help improve management's power over their investors or whatever all the reason they had,

or like a branding event a lot of people are really doing for like their brand reputation. But they didn't, you know, You see who really means it? Yes,

if I find out who really means it. So just talk about why that was important to you before the crisis. And maybe how your understanding of what it means to be multi stakeholder has evolved because

of it. Yeah, let me just tell you a little bit of a background. So I went I'm a weird I'm for a haps, an oddity of Silicon Valley Because I'm not an engineer by training. Um, I'm not I don't not a business person. Go to business school. I'm a designer. Um, I went to Rhode Island School of Design and I said, there is a risky people know as risky, too, And, um and I was an industrial designer, and I I loved index resign because somebody once said industrial designs the design of everything from a toothbrush to a spaceship and everything in between. And I said,

That's what I want to do. And so suddenly I became industrious Einer at Christie and Industrial Zion, in some ways is one of most holistic design education. You can get there like among the most holistic thinkers. I mean, think about it. You have to know how to design a toothbrush and a spaceship and literally like we worked on both in our classes. There was an internship at NASA and things like that. So and when you do industrial Zain, you have to think about not just the product you're designing but its impact on the user. You have to think about use journeys, but its impact on the broader world. And when I got to risky, there was this new movement happening in the time was called the Green Movement. It's now we would consider it sustainability and global warming, climate change.

And, of course, this is 2000 and 2000 year 2000 to 20 years ago, says his before, a lot of the it was just emerging on college campuses, a lot of movement starting college campuses. This one really started getting legs in the late nineties, early two thousands, and suddenly a good product was no longer a product that's sold no longer. Even the era of the Internet of product customers actually liked. It was a product that was healthy for the environment, and so at the time, it was all about. Products were healthy for the environment. Now, when I came to Silicon Valley,

something occurred to Joe and I. There were more than one way to define a product, being healthy, right? If I had a food company, I just didn't want to know what the carbon footprint of the greenhouse gas offsets of the food I was making was. I want to know how healthy the food actually is of the person eating it Well, the same could be viewed as a community, a marketplace, social media company. Anything are these products not just engaging users, but they actually good for users And not only the good for users, I think good for the other stakeholders involved. And the reason this was important was I both brought this lesson Silicon Valley. But I need to admit that I also learned this lesson the hard way because I also learned a letter. Another lesson.

Silicon Valley, Which was that? I mean, it was a lesson I gleaned from pure mid er. He was the founder of eBay from Craig Newmark. He was a founder, Craig Sis, and they believed, and this was a mid nineties Internet kind of philosophy that the Internet is an immune system was very libertarian. View the Internets and immune system, and your job is the building immune system right tools to the communicant moderate themselves, and that it would be viewed as not right for you to have a heavy hand, adjudicate things, decide what's right and what's wrong. And so then we all became platforms, and that was the culture where platforms were hands off and we don't take responsibility.

And in fact, it wouldn't be right to take responsibility. But we'll build tools will build reputation, systems will build flags, and the committee will moderate itself. And that was the vision when that's what I believed. We tried that experiment, and, you know, I learned the hard way that that is not enough. And I probably learned the hard way sooner than other Internet companies because Airbnb is like the Internet moving into your neighborhood, and so you kind of feel a lot sooner. And so most companies Facebook, Amazon, they kind of got screwed name when their big right most of scrutiny involved them being big and the implications of them being big we got screwed me like within weeks of going to the markets. We were a little and so we had to learn the lessons the hard way.

And a person I hired named Blended Johnson. She was my chief. She's my general counsel, eventually became my CEO. Now my board member. You know, I always start growing up when people don't like you should avoid them. And Belinda said no. When people like you should meet with them, you should look across the aisle from them, like looking in the eye and nine times out of 10 they're gonna hate you a little less after you meet with them because it's pretty hard to hit up close. And as we started meeting everyone, we started realizing like our product is having impacts good and bad on communities on people. We need toe move very, very quickly, and I think that we ended up playing a lot of catch up.

And I thought, you know, I 30 thing about this, like 16 4017 I started thinking about are our companies like wet cement? It's not. It's like, kind of still Moldable. You can still shape it, but it's kind of like I don't know, Maybe it's a weird analogy. It's like taking like you're baking you're putting, don't you put in the oven. Once you bake it, it's kind of hard to add a add ingredients. And so the oven is like being an I p o. Once you go public,

everything gets kind of baked, right? Can't really change everything After you go public. I thought to myself, we better bake in what we care about. And so we wrote down all of the things that we cared about. And we said, Like, we kind of wrote down a bunch of principles. Kind of like, you know, like, we will always do this. This is the things we care about even more than core values, core values, air like your shared behaviours,

right? Like we embrace simplicity. That's 1/4 values behaviour. But the principle is the way they're gonna live your life, a kind of decision you're gonna make, like a principle is an example would be like, we're gonna keep our guests safe. No matter what we do as a first priority, we're gonna treat our host like partners, you know, we're gonna diversify the communities that, um, that welcome guests so we can create more economic opportunities like kind of principles

and and pretty unusual among tech platforms were being honest. Pretty new idea that your that your hosts are like almost like the citizens of your nation state. That's not usually the way that tech companies have thought about people they derisively

call users. Well, first of all, isn't it so funny? They call them users like as if they're like, It's like your products addictive cause don't you call a user somebody who is addicted to something like their user, a drug user? So I never really liked the word user, like, you know, not like a user. Um, I also think just this is as an aside, one challenge of Silicon Valley is not how reliant in its on data, but how sometimes over Reliant it could be on data. And what I mean by that is almost every metric every graph, every number is a person metrics or people to metrics or people,

and suddenly you can get very in on unintentionally sociopathic, you know, like no average person would just not care about a person suffering. But when they're reduced to graphs, they don't become people, and that's suddenly there is almost no empathy of decisions you're making. And so I think that that becomes the problem. And so suddenly, your master are your metrics, your metrics of your master, which is really just saying your shareholders of your master of not even your long term shareholders, your short term shareholders. And that's not necessarily who most people start companies for. And so what I thought was, But my founders said, Why don't we just write out who are stakeholders,

even are? Well, who are they? There are shareholders, there are employees, there are host, there are guest and they're also the communities we operate in. In a larger sense, the public. And then I wrote, Well, what do I want to do is serve these and I wrote down like 15 to 20 principles. I ended up refining it to the list of 13 and I wrote these. They're kind of like was too many. Yeah, yeah,

exactly. And I I iterated, downed about 13 for you know, So it's like like kind of like 3223 each, you know, And so like one would be like, we'll create more entrepreneurs in the world will treat our host like partners will make sure our guests belong, you know, one by one. And then the most important thing was the next thing. How do you actually measure your impact on each of these stakeholders? And that was the really critical thing. I always felt like it was. The most important thing you need to do is just have the information. If you know the impact you're having on somebody, then you're going to really think more differently about how do,

um make decisions and the final thing. And this is the thing that you and I worked a lot on. This something you've talked about, your you created the Long Term Stock Exchange. I said. The real challenge isn't that people aren't just serving their stakeholders, but the time horizons wrong and the time horizon becomes quarter to quarter rather than year to year. And it's really, really easy over the course of many years to understand what the right thing is. But it can be very hard quarter to quarter. And so I felt like the basic principles of a company in 21st century. We're gonna be different than the basic principle company exiting in the last century. These would be companies to be multi stakeholder, not sing early stakeholder and they be multi year or even multigenerational. Long term infinite horizon, you know,

doesn't expire. And that was the opposite of serving. Shareholders sing early in a short term basis, and everything I said Eric was The best thing you can do for shareholders is toe for the public toe. Want your company to exist? The best thing for shareholder value is for the world Want you to exist in more and more. The public is having the power decide which companies exist, which ones don't which ones get regulated out of existence? And there's, I think,

a new generation that winning the winning the public's

trust, Yeah, I mean, the public's trust matters, and honestly, it's gonna matter now more than ever. And, you know, the trust is like trees. It can take generations to build in seconds to cut down, and so you got to be really, really careful about that, and honestly, the world moved with speed. A trust trust is your ultimate currency, and if you don't have that, you don't really have very much you can't really operate.

And so but then so But take that back now to this crisis because I think the the obvious thing people would assume. I mean, I heard this from many people were just reading in the Wall Street Journal the other day that like Ah ha, now that there's a crisis, the company has to be more short term. You can't be multi stakeholder if you're laying people off cause, ha ha gotcha employees or one of your stakeholders. So So I think it's actually really a key moment you talked about how this is. This is a defining moment for the company. So explain how these 21st century principles that we've been working on, how do they apply or resonate in this new world?

Well, you know, Eric, the kind of Onley matter in times like this, don't they like like night? It's almost like having an emergency plan, but it doesn't work in times of emergency.

Yeah, right. What what is it for? It's easy when everyone's making bank and everything's easy. And you know all stakeholders are thrilled with your performance. Of course, it's easy to say we want to support update

I guess the way I thought about it was a crisis would tell you who really means and who doesn't. And it was really four times like this that you would have those kinds of crisis. And this is a really interesting paradox. And you've talked about this at times of crisis. You become both more short term in more long term. In one hand, you have a new sense of urgency and decisiveness. And instead of thinking week to week and month to month, you think day to day an hour to outer, you become very present and focus the task a hand. On the other hand, you also become very long term oriented. Suddenly, you realize you can feel that decisions you're making are gonna have imprints for a very, very long period of time

and give an example of something that you've decided or had to do during this period

but that oh

my, you might have done differently if you didn't have that long

term perspective. Let me give you let me like three or four examples. Okay, The first and one of the hardest things I ever made was this thing. It's gonna have a very and a dying name, but it's a very serious topic called an extenuating circumstance. Policy doesn't sound so dynamic, but it's crazy. We had every We handle money, right? So people pay are being bathe a prepaid Airbnb. We hold on to money and then once you check in your Airbnb home 20 we pay the host, okay, And then we hold the commission. So we're in the process of holding billions of dollars any one time. And when the crisis occurred, we were literally hired holding billions of dollars of guests money.

In all of a sudden, we had guest one to cancel more than a $1,000,000,000 of bookings at once. All once we got, like, a $1,000,000,000 cancellations. Now the problem is they actually couldn't cancel because for a percentage of our host, they do not have a flexible cancellation policy. So you know, and that makes sense because these are regular people and they need to count on this money to pay rent. And so what do you do when you have millions of customers who say that you owe them billions of dollars and they say I feel unsafe? I can't travel, need my money back and then all of a sudden you have, in the other hand over a 1,000,000 host saying I need you to pay me the money. I'm Dio because if you don't, I may not be able to make my mortgage my rent. It's impossible situation and we don't

have enough money can't

win. We don't have enough money to cover it. And we are burning money quickly now because travels plummeting. What do you dio you? I mean literally. It's the most perfect example. Guess want their money host want their money and shareholders want to make sure that you have enough cash to survive. It was the ultimate predicament, and so what I ended up doing was make won the hearts has ever made. With that a choosing between guest and host. I chose a principle, I said, in a pandemic. The number one principle is health and safety beyond the side of health and safety. If you choose health and safety, you're not wrong and obviously there's nuances to that. And so I chose health and safety,

and I said, I don't want a situation where guests feel like they're gonna have toe travel because they can't get their money back and they're gonna make unwise decisions. So we ended up overriding host strict cancellation policies and instituting extenuating circumstance to allow gastric their money back. Suddenly host her livid. There's not all host, but a bunch of hosts were livid, especially the more professional ones, and we knew that they were really hurting. So then I made a second defining decision, and the second defining decision was we decided to take $250 million of her own money and give it to host, not advanced to host. Give it to them. Now a cynical host would say, Well, that was my money that was due to me and it wasn't even all their money. We were only able to give them 25% of their money that was owed to them. But I was $250 million of money on her own balance

sheet at a time when you were struggling to raise money. Years

no for a travel company of pandemic, I can tell you that no matter how many buildings it always raise, every single dollar starts a cow, especially a pandemic. You start to value money like you haven't in a decade. And so suddenly every dollar accounted in $250 million. I mean, you know, in the middle of a pandemic, you don't know if that's the last 250 million you're gonna need. Like, And by the way, people aren't looking necessarily to give money to travel companies in pandemics. That's that's not an easy, total addressable market. So that was That was a very important decision. I would say that was a defining decision.

May be, too. I feel that we made the right call. I think we kind of I may be messed up a little bit communication to host. I wish we could get more to them, but that was a defining decision. And by the way, we end up raising $2 billion in the lead investor, Silver Lake. The guy Egan said one of the reasons he decide investing us was because of decision we made to support our host and used her own money. Wasn't that just ironic? There was concerned that if we give money to host our own money, investors may not want invest in us. In effect. That was one of the reasons they decided to invest in us, so I'd say that was a fairly for defining decision.

That's number one. I'll give you maybe two more. Maybe the 2nd 1 was, I said, We may not be at this moment as relevant as we used to be if we're not as big as we were not as relevant, but we can be useful in this crisis. And so my another guiding principle I had was Let's be useful. And I started thinking like reading articles about all the company's General Motors and others that were trying to re appropriate their assembly lines for toe produced ventilators. And I said, Well, Airbnb were not manufacturers. We can help with ventilators. You know what, all these health care workers who have to put people on ventilators, they need places to stay at. A lot of nurses,

a lot of doctors, a lot of e M T's fireman, others they are often going to other towns that have outbreaks, places where they don't live or they're living, and with her family or than elderly.

Yeah, they're afraid of infecting their own

family, especially if they, especially if, like their parents live with them, they're older. And so that we had all these people need housing. And so we basically worked with our hosts and made a bold pronouncement that we're gonna provide housing for 100,000 people in need and something something amazing happened. Thousands of host volunteered toe offer their homes for free or for a discount. And we said, Well, subsidize every home by basically 15% by waving our fees. And then I decided to I said, we need to put our own skin in the game. So, um, I ended up putting in $5 million my money to cities. I put two million in the city of New York to be all the house workers in the front line through a union called S E I U and put in like,

I think, a 1,000,000 or 1,000,000 half to Los Angeles, 5000 Detroit, 100,000 to New Orleans and you know, So we started putting my own money and because I really wanted people to see we had skin in the game and it wasn't just the corporate cash were using. I was putting on my own money. We had to be useful, and we really want aspire, and I think that really made a difference. That was maybe a 2nd 1 to call that opportunistic. And the 3rd 1 was, you know, I would say, the layoff that we had to dio How does it you know it can feel very paradoxical. How does a company that serves stakeholders, including its put employees,

confront a layoff and more even difficult in that? How does a company whose mission is centered around belonging have to tell thousands of people they can't be at the company anymore? It was very, very difficult thing to face. I mean, not nearly as difficult that people had to face, you know, leaving Airbnb in. You know, I think the way you deal with this is you have to look it when you have to reduce the size of company. You have to look at all the stakeholders and no, that you aren't just there serving employees, but you also from billions of host, depending on you, depending on your survivability, so that they could pay rent that every one of our employees are also shareholders. I'm proud of that fact,

and you made sure that everyone out walking out the door remains shareholder.

100% of employees remain shareholders because we'll waive their cliff. We didn't want, you know, they're one year Cliff. We don't want people not having your equity. We got everyone to the next best. And so we wanted to make sure that we were thinking of all stakeholders, as made the cut. I wanted exhaust all their options. But ultimately, you know, we we we had to face a couple really hard truth. Even after we cut a lot of money. Even after his $2 billion there were too hard truth, We did not know how long the storm would go on. Nobody does. We don't know if this is going on months or years,

and we don't know how long it's gonna take the travel rebounds and we know travel would rebound. But even when it does rebound, it's gonna look really different, decades of change or happening in years and so suddenly the shape of our company needs a look fundamentally different than it was before and we couldn't afford to do everything we used to, so we had to get really back to her back to basics in the crisis confronted a lot of clarity us that we're gonna go back to basics back to our roots, back to what makes every me most special, everyday hosts that offer experiences in homes. And that meant that we had to confront a lot of difficult decisions. We had a pause, transportation pause or content efforts. We had to reduce our investment in hotels and Lux and other things. And that meant that we had to be confronted with the very, very painful decision to reduce the size of our company. But you know what? Like that doesn't mean because you're confronted with a layoff, that you can't do it in a thoughtful and compassionate way,

and there's no excuse not to do that. And it doesn't cost significantly more. And, you know, I always what I thought was, whatever it cost us to take care of people leaving it cost us less than a cost them not to get it right like they'll feel more than us.

One of the criticisms I've seen throwing floating around about Silicon Valley is you have companies that are simultaneously raising money and laying people off at the same time. So to talk about how you could have handled that paradox because I think some people would naively say, Well, you're raising more money. Doesn't mean you don't have to lay people off. So what was that like to be simultaneously dealing with both ends of the business in those two different stakeholder communities at the

same time? Well, again, when I first started this crisis, I said that we have to do four things. You know, you have toe manager stakeholders with diversity of business. We have to cut costs and raise money.

It was a painting with a painful fundraise compared things you had to do in

the past. It wasn't well, yeah, I could say it was incredible. It was certainly Ludwig, please wait. It was different than certain rounds where, you know, we're growing two or three x year every year. Um, that being said, I will tell you, I think we had 30 or 35 investors proactively reach out to us. So now the price, the terms, we're gonna not be the terms you get a few months earlier, but we actually had quite a lot of interest.

And the good thing is, was it was included people there already in our cap table. So people, the most information we're looking to double down. And but I gotta tell you, it was not easy. It was It was a stressful, very, very stressful. And, um, he kind of feels like the house is burning down or burning. You've got to rebuild the house, but you're in the house and it's still on fire. And so it's this really challenging thing that you're doing. And so,

um, you know, going back, we were we forecasted that even after raising this money that we were gonna have revenue approximately half what we had last year and that we didn't know what next year would look like. And my guiding principle was Remember, the number one principles be decisive. But the next one was we needed to make sure that we preserve cash and that we you

know, because you can't You can't help any of your

stakeholders. Yeah. Yeah. With so many people depend on Airbnb Airbnb must under were faced with a crisis suddenly enduring. You realize the

value in accomplishment in its own.

And so yeah, you're right. Like surviving a crisis is succeeding. If you're a travel company and it's a pandemic. I'll say that. So that certainly is true.

Do you wish you'd been public already? So you could have tapped public markets for the funding.

I don't think the outcome would have changed much. I think the interest rate would have been marginally lower. Um, but it would have been I could have given you a different parade of horribles. Had I been a public company, I think it was gonna be hard, no matter what. I mean, there's good times, bad times. And there's right now. Yeah, I I think you could Monday morning quarterback that all day long it is just too hard to know for sure. Um, it's really upsides and downsides anyway, just to go back to where we were. You know,

once you confront this reality that your business is gonna fund my look different. I mean, listen, we thought about things like furloughs. We thought about things like pay cuts. The problem is furloughs and pay cuts work when you're going through a crisis or unknown period is temporary. The problem is, if you don't know how long it's going on for, people can't take pay cuts indefinitely, and you can't furlough people just indefinitely, you know, because then they're holding out and they can't move on with their lives, and it can be very unfair. And more importantly, we knew the shape of the company would be really different, the other side.

So we had to reshape the company quickly And member in a crisis, those that are most resilient survive. And so resilience and adaptability means that you have to adapt quickly. You cannot, you know, you gotta be willing that adapt. So once we did that, I basically wrote down a series of principles. Again. You'll notice I I do this a lot. And I wrote down five principles for the layoff. I said the number one and I said, These are gonna be principles. Got it by our core values. Principle number one. We're gonna map all reductions to our future business strategy and the capabilities we need.

You need tohave some fair and logical kind of order to it. Number two, we're going to do as much as we can for those who are impacted. Number three, we're gonna be unwavering in our commitment to diversity. Number four. We're gonna optimize for one on one communication for those impacted. And number five, we're in a wait to communicate any decisions until all details air landed and I did my very, very best to stay true to those principles. And, you know, um, it is really, really hard, but I,

um we really pushed. It's faras weaken. Go. I didn't want to go to bed at night knowing I could have gone further and didn't and regretted it. You know, I think in a crisis, well, you often regret is not going far enough. Whatever it is. You know, you often regret half measures in a crisis in and I didn't want to be viewed as somebody who did half measures. I really wanted to do everything we could. So we way gave, we gave him we kind of. There were a lot of things we did. We have, as you mentioned, we waive the one year cliff. We didn't want people not having equity out the door. We

were very generous with

reference to Yeah, we we we gave we gave everyone a baseline of 14 weeks of severance plus in the United States one week per year service. Other countries, you know, that was the baseline. Some countries, you know, varied healthcare is more of the US thing, obviously invited. Unfortunately, it's a US thing, but we thought, you know, in the midst of a global health crisis, it's unknown duration. We want to minimize the burden of health care costs. So we decided we get We gave everyone one year,

12 months of health insurance to Cobra. So, um, and then the last thing we did, a lot of this was Joe's ideas. Chose my co founder was job support. We said, You know, the thing people need even more than money is a job because you get money and you have a job. Money is going to be gone, so you need you need a job and we thought, you know, we could actually do a lot job support. What if we helped everyone get their next job? And so we kind of Joe Leadsom brainstorms and we came up with a few out a few ideas that the first idea was to create an alumni talent directory. Basically,

everyone leaving could opt in. It's optional to put their basically profiles on a website, we build basically just like a talent directory of those leaving and it would have their contact info they're linked in. And we built this. 1000 employees opted in in 350,000 people visited their profiles. It's so hopefully some, you know, that will yield some helpful results for people. The next thing we did is we want to create, like, our own internal placement firm alumni recruiting firm. And so we said we're going to dedicate a significant percentage of our recruiters to, um, not to hiring people to work for Airbnb. But Teoh, a sign to every employee that wants to be assigned a recruiter in the 175 people opted in leaving to have a recruiter assigned to them.

And as of today, we've assigned every single one of them to a recruiter, and additionally, our executives and employees rose up and said, We want also personally help people find their next job. Now this can also seem counterintuitive. It's like, Why would you spend your energy to help them not work for you and work for someone else? Well, it's kind of the same reason why, in the long run it pays not to be a jerk because If you're like, kind of a jerk, you can win a transaction. You win the battle, but you lose the war. And I always felt like we will be successful if people want us to exist in they in there rooting for us. And if we're review it is doing the right thing. Just trust that everything will sort itself out. So I guess this is an example of a long term decision. There's no near term benefit to us helping people

leave. It's a significant

near term cost. It's a near term cost, but it just feels like the right thing to do. And again, if you want to be remembered for how you handle that, like, what is the right thing? Well, like they need it more than we take care of. Your people carry people, and they need help. It cost us a bit, but the cost to not helping is so much greater to them.

And so you have any pushback internally on wanting to do all this stuff. This is unusual for a company of your size.

Um, I'm pretty proud that there was not a ton of pushback on a lot of the time based things. You know, there were definitely debates on the financial stuff, and I understand why money is like oxygen. And when you're a travel company, feels like you're losing oxygen. So every dollar counts and it could seem kind of crazy. Look, what do you mean you're given give host $20 million. You're gonna give employees what, like that's very expensive. But ultimately, I think when you look with the fullness of time, I think people realize like this is fundamental. The right thing to dio and beyond, like we have,

like there's like Maybe if there's one thing that's even more important in the company than ensuring its survivability, it's making sure it it helps the world through this most harrowing of crisis like that that is actually way more important than us and during I want us to endure. But most importantly, like hundreds of thousands of people are dying like we all have to rise up to a challenge greater than ourselves. And companies were afforded the right by society to exist. And so it's important in times like this, you know that we all contribute when we all help out. And so you know I think it just it just I think like very few people went out of business doing the right thing. I mean, there are limits and you could be foolish and you got to be smart and thoughtful. But you know, a lot more people when I have business cause they didn't do the right thing,

you know? And that to me, seems like, you know, kind of answer this criticism that that has come up, that what it means to the multi stakeholder is not that you guarantee people a job for life. You know, it's still a business. And so you have an obligation to make sure that people businesses are aligned with the long term vision of the company that's actually humane, not cruel. But the way you treat people is what matters if you have to do something

like this exactly. I mean, I think that what people really they don't. It's Leslie Begrudge e for hard decisions, and it's really about how did you make the decision, and did you do everything you could? And did you have compassion?

Talk about the letter you wrote because that was also very unusual and very heart centered for, ah, letter announcing bad news and talk a little bit about the response that you've had to. Oh

my God, I was not expecting that. So basically, I remember somebody saying, You have to write the email your life and I was like, Oh, God, that's never a good set up. And to be very clear, the letter I wrote was actually a script, because I do. I basically Every Thursday at four o'clock Pacific time, I basically hostess all hands like a Q and A from my house. I used to do in the office now in the house. And so I think I did it like six Thursdays in a row, and this was a Tuesday. And so I had Teoh draft it,

and I ended up writing out and I had to write this thing out, and I basically wonder right out every single thing I wanted to say, and I used it as a kind of a script that I would talk through. I kind of made it more human when I read it, but I also wrote as an email, so I only I didn't read it. Write it to be a open letter I wrote it as an email to send after I read it on video, you know, and then I was very emotional is reading it. And then I sent as an email, and my my comms team made the decision to put it the publisher online not to promote it, but because I was about to send it to 7000 people. It was obviously gonna leave. It was gonna leak, and we knew a reporter was gonna get it and they wouldn't get sections. And they were to start reporting on sections.

And we said, We don't want to, like, get in the back and forth of what I really said what I meant. So he said, You know what's gonna put it on the website so that reporters kind of have to report on it like, very accurately, because there's a record of it, and that was Onley thing was meant to be. It's just to be a source of truth. There's mail misunderstandings,

and then we'll obviously linked to it so people

could get for themselves. Yeah, so something super unexpected happen. It kind of started getting passed around a lot and it wouldn't went like it got had I Here's Here's the good news. Had I known it would have been so public, I would have written a worst letter that would have been so self conscious I wouldn't have.

You didn't realize

you were addressing. I wouldn't have said like, I love all of you like I literally said that in a letter. But I was so emotional, and I felt that I I wrote a letter that was so honest the letter that you could only be so honest about if you didn't really think the whole world would judged and evaluated cause then suddenly be self conscious and little. I know now the whole world feels in cold reading it. 1.2 million people ended up going to our website in reading a letter. An email about a layoff in it was mostly

about like severance

policy, severance positive, social 0.2 million people. And it was like it turned into, um, probably one the most defining things I ever did we ever did. And to be really clear. When I say I wrote it, I had I have a great team that helps me and they edit it and they kind of pushed back. I have this, um, woman that my team Kylie, she's, like, unbelievable. And people he asked you to help me

so well, but there was stuff in there that obviously no consultant, no hr consultant would ever have advised you to say No, no, no, it was so obviously personal.

It was it was me with one or two people. It was me with one or two people that were editing it and helping me, and we didn't share super broadly. I made sure my executive team saw it cause I had to be very careful about making sure I was giving the right information. But I didn't have any professionals, so to speak or any paid, uh, you know, I didn't like doesn't read like, a speech. I didn't, like hire a crisis communications firm because I think that people kind of protect you from yourself, but who you are is what people really want to hear, right? They want to just know your human. You're really you're talking. You're not full of shit.

And so, you know, we wrote that in in in the kind of end up spreading a bit and and, you know, I think it was just the end of a chapter, right? And I I looked back and I say, I didn't get everything perfect Human humans make mistakes, but I am in aggregate really proud. Not just that this is we made, but of however one acted. I mean, you know, a crisis reveals a lot and you learn a lot about people, as we said, and it kind of is this,

like, kind of truth serum and what I learned through this harrowing of experiences, especially this past week, I don't know. I'm just think about this like there is a deep love that people have for one another and they're incredibly loving. It's incredibly caring. I was reading like hundreds of people saying goodbye and linked in You know, they would like, you know, like it's got like, a news feed and you could and they were, and people were using the word love on linked in. I was like, When's the last time you saw the word love on linked in loving, linked in Do not go together? Well,

she certainly did, and I was so proud because I got so many thank you Letters from people leaving, and I'm like you. The wrong person is thanking the other person. I reserve the thank you to you because you've given so much of your life to Airbnb. You know, I I have a big fan of Joseph Campbell. Joseph Campbell's a pathologist who created this thing called the Hero's Journey the Hero's Journey. Basically, he wrote a book. It's called Hero. The 1000 Faces and Joseph Campbell's of Pathologists. He said. Every move you've ever seen from The Wizard of Oz Teoh, I don't know, like Star Wars is the same story.

It's basically same here, a different face. They start in the ordinary world. They crossed the threshold to the new magical world where they have Day of the battle dragons or a sleigh. You know all the stuff and the person they are dies in a new better. The version himself is reborn. This is the plot, the conflict, and they go back to the world they came from with new special powers, and that's basically every movie you kind of ever seen. It's just basic mythology, and I study this because when we wanted to build Airbnb, I wanted us to build end and trips. And I thought, What if a great trip is like the hero's journey? It's like because it doesn't that sound like travel.

You start your ordinary world, you go to the new magical world where you learn, you grow and you come back the world you came from. So elevated version yourself, so end of studying just of Campbell. And one of the things that Joseph Campbell said is He said, a hero is somebody who serves something bigger than themselves. And I thought to myself when I was saying goodbye to 2000 people or 1100 people, that they gave so much of themselves to something bigger than themselves. And that thing was Airbnb, and to me, they're heroes. And I told them, You know, like the hero's journey, you've kind of complete. You kind of. You went to this new world, you got these superpowers and now you're going back to the world you came from. But with these new powers ready for your next adventure,

and what do you hope? What do you hope they're going to take away from Airbnb and and do out in the world now that you have

set them loose. I I hope they I hope they bring our are deep sense of care and our values around belonging and in love. I mean, sounds weird for business leaders say that into anything they dio you know, I think that I mean, you and I were talking about this the the 2000 tens. There was this article written I read over the holidays this past holidays. It was called the Decade of Disconnection. It was writing about the 2010 that decade that the most digital, digitally connected era in history was an era that was seemingly most more disconnected than ever before, that people were just being disconnected from one other feeling lonely. And that was before the pandemic. And then so suddenly I think what we're yearning for, somebody feels that was taken away from us human connection. And I think that you start to realize the things that are essential, and there's something that's more essential than even money. It's it's really love,

and it's the feeling like others care about you. I guess that's what love is, right, the feeling that someone else is a deep, deep care for you, and that's what we need from leaders this sense that we care about each other. And if people can leave Airbnb and they go out in the world on whatever they dio, they bring that basic idea of love and care and belonging Toa whatever they dio sounds a little weird, Consented Look corny, But, you know, I don't know times like now I'm sure we wish more people have that. And it doesn't come at a cost. It doesn't cost very much, and every single person can do it. And it, by the way, it's human nature

to dio You know, I it was so bracing and strange to when you said that I love you in, You know, in that letter, I remember when I read it and my first reaction was like, What? Oh, my God, It was like a taboo. You can't say that, but I gotta say, every founder I have spoken to about this and many have called me about it. Every one of us so relates to that. It That's exactly the relationship we have with the people you carefully and painstakingly assemble to go on the hero's journey with you to be part of your rating party. You know, to be part of your building party like this, it's like an extension of your family. And so to have to help them through this crisis is so painful. Precisely because we have that bond.

You know what? I don't I'll be honest. You I could not have even. I don't think I could have mustard myself up to use that word nine weeks ago. I think there's something about this time, that personal transformation. It's such a personal transformation. I've been through my own transformation. I'm like 38 going on 58 or something right now and the last nine weeks. God knows.

I think a lot of us have felt like it was like a decade has passed in a month.

Oh, that's what it feels like, doesn't feel like that. And absolutely, and I just I Suddenly it's like it's like suddenly the moment you see people that you have to care for vulnerable, and it's that moment that you just feel the steep since I cared this deep sense of love and maybe when times were good, you walk down the hallway or like that's whomever in their name, badge hanging off their leg. And the last thing you think about is loving that person, the window in a crisis and they seem vulnerable and they're looking to you to protect them. There's some deeper promoter Bond and it za love that connects us all right, like that's that's the reason that our species is still around because we have this bond that keeps us together

and caring for each other. And

we call that love, I think. And I think it's the thing that provides us the ultimate protection. And I don't know. I think that, like now is the time to strip away like the armor and just to be real man and and I think that's where it is. I mean, you know, there's a saying like the most authentic is the come from the heart, not from the head. Why do we say that? I mean,

it's your brain making those decisions, but there's just it's just something deeper.

And I think what's happened sometimes Silicon Valley is think of it as like you have a head in the heart

and you you choose to two hemispheres of your brain and

way tend toe, not use our heart, just her head and sometimes just one side of our head. You know, I think the creativity,

the intuition, the compassion, these things exist in every single one of us. There is no type person as that.

But those muscles, just some of those get exercised a lot in business. And I think the creative side intuitive side, compassionate side thes existent everyone, but they're kind of suppressed.

Or maybe there were educated out of them.

Wins Last Time and MB. When's the last MBA case study that talked about creativity, intuition and

compassion? But, like if some, if your life was in someone's hands, what quality do you want? That leaders have? Just think about that for a second. If somebody is responsible for you, what qualities do you wanna have them have? Well, maybe those equality should have. When you have responsibly. Thats point in the conversation. Brian and I turned our focus to the future and how companies can use an emergency like this as a defining moment. In Part two. We talk about what he hopes other founders and leaders will learn from. Airbnb is experience his philosophy of building and designing both products and organizations and how to use 21st century principles.

Toe earn the public's trust. How we can build more resilient institutions on the other side based on trust and love and finally, how we get out of the crisis. This has been out of the crisis time. Erik Reece Out of the Crisis is produced by Ben Ehrlich edited by Jacob Tender and Sean Maguire Music composed and performed by Cody Martin Posting by Braker For more information on the cove in 19 Crisis and Ways, you can help visit help with Covic dot com If you were working on a project related to the pandemic please reach out to me on Twitter. I'm at E r I C R I E s Thanks for listening.