Times Square was mostly vacant on the morning of Airbnb’s public offering, save for the dozen or so mask-clad photographers gathered in front of the Nasdaq building to document Brian Chesky’s enormous face, stretched across 9,000 square feet of LEDs. It was December 10, 2020, and Chesky, the high-spirited CEO of the world’s most highly valued hospitality company, wasn’t live from New York for the opening bell, but alone in his attic in San Francisco. Joe Gebbia and Nate Blecharczyk, his cofounders, appeared in dual video feeds below him.
A small group of Airbnb employees and alumni, huddled nearby, high-fived when the clock struck 9:30, the starting gun for Wall Street. “I think the stock market is thoroughly detached from reality,” one of them admitted, shrugging at the screwball logic of investing in a travel company in the middle of a pandemic.
It was a staggering public debut, even by the reality-defying standards of Silicon Valley. Eleven months earlier, the company had realized that it was facing serious trouble: In mainland China, where Airbnb has a sizable beachhead, “We started noticing bookings dropping. And, of course, we knew that was corresponding with the coronavirus,” Chesky recalls. As the virus ripped across the globe, reservations plunged 72% in April, from about 31 million a year before. After a decade of vertiginous growth, it was like nothing Chesky had ever seen. “A company dropping by 80% in eight weeks is like a car driving 100 miles an hour, and then hitting the brakes. There’s no safe way to do that. Things are going to break.”
In the second week of March, as major cities went into lockdown, Chesky convened an emergency meeting of the board to map out a strategy. He had written down a number of principles to guide his response to the crisis: Be decisive, preserve cash, act with all stakeholders in mind, play to win. “To manage a crisis, you need to be optimistic and you need to have imagination,” Chesky says. “Optimism is the most important criteria because the psychology of a leader often becomes the psychology of an organization. If you think you’re doomed, you probably are.”
Airbnb has long prided itself on its so-called airfam, a do-gooder corporate culture where nobody forgets your birthday and employees speak unironically about the power of “belonging anywhere” to make the world a better place. Conference rooms lining the atrium of the company’s airy, Gensler-designed headquarters are modeled after noteworthy Airbnb listings—including an exact replica of the founders’ original living room. “Sometimes you live up to idealism, and sometimes it’s like a bad episode of Silicon Valley,” Chesky jokes.
Suddenly, idealism was colliding with financial reality. Racing to stanch the bleeding, Chesky cut nearly a billion dollars from the marketing budget and raised $2 billion in emergency debt. The terms of the financing included warrants that valued Airbnb at $18 billion, effectively half of its 2017 valuation. On May 5, facing a catastrophic collapse in revenue and no ability to predict when travel might resume, Chesky announced that Airbnb would be laying off some 1,900 people—about 25% of the company’s tight-knit staff. “I used to say we’re a family,” he reflects. “And then I had to evolve my language and say we’re like a family, because families don’t do layoffs.”
“I used to say we’re a family,” Chesky reflects. “And then I had to evolve my language and say we’re like a family, because families don’t do layoffs.”
The new Airbnb would be a leaner, more focused business. In a May 5 memo, Chesky explained to employees that Airbnb would pause its efforts in transportation services and Airbnb Studios, its in-house film division. It would also scale back its efforts to list traditional hotels on the platform, which had been bolstered by its 2019 acquisition of HotelTonight, and deprioritize Luxe, a white-glove offering for the global elite. The crisis, Chesky told staff, had sharpened Airbnb’s determination to “get back to the roots of hosting” and perfect its core product: individual hosts.
Morale took a hit, but investors were quietly thrilled. By summer, millions of Americans were discovering that indefinite office closures meant they could work remotely from anywhere. International travel had flatlined, but domestic bookings showed signs of life as city dwellers scrambled for rural pieds-à-terre to ride out the pandemic. The company quickly reconfigured its website and app to tempt would-be jet-setters away from virus-scarred cities, where Airbnb is most heavily concentrated, and toward beach houses and cabins, among other photogenic retreats.
Airbnb had already been planning to go public in 2020, and in August, Chesky filed for an IPO. As listing day approached, in early December, Airbnb increased its target IPO price as high as $60 a share, valuing the rental platform at $42 billion, but demand kept rising. When Chesky beamed onto Bloomberg TV after the opening bell on December 10, he seemed shocked to learn, in real time, that shares were set to begin trading at about $150. “That’s the first time I’ve heard that number,” he stammered, perhaps doing the mental math that put his company’s valuation at more than $100 billion—and his own net worth north of $10 billion. “It’s . . . that’s . . . um . . . that is . . . yeah . . . I’m very humbled by it.”
Humbled, but for how long? Over the past decade, Airbnb has grown from a simple home-sharing app to a global network of 4 million hosts offering every kind of lodging, delighting guests but enraging city officials and others who regard the ability of travelers to “belong anywhere” as a blight—or worse, illegal. Airbnb’s IPO prospectus estimates its total addressable market to be $3.4 trillion, if meddlesome regulators don’t get in the way. With the stock trading at a multiple of about 30 times last year’s $3.4 billion in revenue, investors are betting that the company has plenty of room to grow.
Airbnb still defines itself as a mission-driven startup, even if that mission can appear more like Manifest Destiny. The company has courted large-scale property owners and hotels, sometimes at the expense of its mom-and-pop hosts. It has been slow to clean up perennial issues with its platform, such as unverified listings and unruly guests. And it hasn’t been afraid to sue cities over regulations when compromise fails. Chesky, with his pivot “back to the roots of hosting,” has proven himself to be a savvy media operator throughout. (An internal memo, circulated shortly after the pandemic hit, discussed how Airbnb could use the crisis to soften its image.) But with travel poised to snap back—and with Airbnb now worth more than Marriott, Hilton, Hyatt, and InterContinental Hotels combined—the company is anything but chastened. Between the lines of Airbnb’s comeback story is a road map for world domination.
The IPO was a fairy-tale moment for Chesky and Gebbia, who spent their first year in business living off cereal and maxing out credit cards to stay afloat. In October 2007, the roommates had the notion to turn their San Francisco loft into an “airbed and breakfast” to help pay their rent; they threw a website together, found their first guests, and in February 2008, they brought on Blecharczyk, Gebbia’s former roommate, as chief technology officer. The pitch was simple: book rooms with locals, rather than hotels. Most investors passed, but Paul Graham, the founder of Y Combinator, was impressed by their hustle. “They were exceptionally resourceful,” recalls Graham. “They endured a whole year of zero growth when anyone looking at Airbnb merely as a business would have given up.”
The rest, of course, is Silicon Valley history. Airbnb—the name was shortened in 2009—wasn’t the first startup to market short-term rentals, but it had an edge on design and execution. Chesky and Gebbia, who met as students at the Rhode Island School of Design, obsessed over every detail of the platform, using a Disney storyboarding technique to map their customer experience from the perspectives of both hosts and guests. Blecharczyk, a programming whiz kid who put himself through Harvard, built a payments system inspired by Apple.
Just as important, perhaps, was their timing: Airbnb hit its stride right as the global economy slipped into the toilet. Bookings exploded from 21,000 in 2009 to 140,000 in 2010 as travelers searched for more affordable ways to explore. A year later, Airbnb announced that it had crossed 2 million nightly stays and added $112 million in venture funding, valuing the company at more than $1 billion. What began as glorified couch surfing for bargain-hunting millennials became an economic lifeline, and then, for many hosts, a way of life. Annual revenue quadrupled, then doubled, and then doubled again. In 2014, Airbnb repositioned itself as a lifestyle brand; Chesky, sounding increasingly like his idol, Steve Jobs, began referring to Airbnb’s curvilinear logo as a “universal symbol of sharing.”
Incredible wealth doesn’t appear to have changed the founders, now in their late thirties, who remain as close after 13 years in business as when they were sharing a floor on Rausch Street. Final decision-making flows through Chesky, who sits atop an org chart loosely modeled after Amazon, but the three tend to speak with one voice. “We have complementary skill sets,” says Chesky. “Complementary strengths,” adds Blecharczyk. Gebbia reaches for an analogy to hammer the point home. “We’re a three-legged stool,” he explains. Chip Conley, the retired hotelier who joined Airbnb in 2013 and continues to serve as a management guru to the three, describes the configuration as nothing less than a holy trinity. If “Nate’s the brain and Brian’s the heart” of Airbnb, he says, then “Joe’s the soul.”
Variations of this origin story have been told thousands of times, and Airbnb keeps track. In his first post-IPO earnings call, Chesky boasted that Airbnb was featured in more than half a million articles in 2020: “That’s how we really built the brand, more than anything, is PR.” More recent story lines, however, have been harder to square with Airbnb’s self-image. The company has increasingly been caught between its spiritual mission to “create a world where anyone can belong anywhere” and the scale-at-all-costs logic of modern venture capital.
“I have no idea how they lost that kind of money that quickly,” marvels a prominent investor. “It wasn’t just marketing. It was bloat.”
Airbnb made adolescent mistakes—its trust-based platform was ripe for exploitation and abuse by grifters posting fake listings or guests hosting sex parties—but was expanding so fast that it never really solved them. Like many a tech startup, it struggled to resist the siren song of flashy new projects: custom-designed houses, concierge services, travel documentaries, branded apartments. There were plans for an airline partnership, or perhaps an airline of its own. By 2017, investors were anxious for Airbnb to go public, but Chesky was adamant about growing money-losing ventures like Experiences, the company’s host-led alternative to commercial tours, as part of his vision to transform Airbnb into a full-fledged travel agency. Between 2018 and 2019, the company went on a hiring binge, practically doubling in size. After achieving some measure of profitability in the three years prior, net losses increased fortyfold. “I have no idea how they lost that kind of money that quickly,” marvels a prominent investor. “It wasn’t just marketing. It was bloat.”
The company has also faced backlash over its heavy urban footprint. From the beginning, Airbnb’s unregulated growth had united an unlikely alliance of affordable housing activists and hotel industry lobbyists who contend that short-term rentals take housing off the market, drive up rents, and evade regulations. All of which is true, to one extent or another. In 2017, Parisian officials began requiring Airbnb hosts to register with the city after finding that 20,000 rental properties had disappeared from the housing market. In Barcelona, where locals fear tourism is out of control, researchers found that Airbnb had increased rents as much as 7%. A startlingly high number of listings in major cities currently break local housing laws: According to Inside Airbnb, a site that scrapes public data from Airbnb’s platform, about 80% of last year’s listings in New York and Berlin were likely illegal.
In 2015, Chesky hired Chris Lehane, a former political fixer for the Clinton White House, as head of global policy and communications to fight for looser regulations and manage public perception. Lehane modeled his approach after a U.S. presidential campaign, establishing “field operations” to build relationships with stakeholders in key states and countries. He also ramped up Airbnb’s lobbying efforts, engaging former mayors and attorneys general to advocate on the company’s behalf. “They hired a lot of ex political people around the country,” says Murray Cox, the data activist who runs Inside Airbnb.
Behind the scenes, Lehane’s bare-knuckle tactics can be divisive. “He’s fucking poison,” a former employee tells me.
For some on the policy team, the work could be disillusioning. One former member describes the tension between crafting regulatory solutions that benefited local communities and those that boosted Airbnb’s bottom line. “The company has a really hard time being frank about those regulatory frictions,” she says. And when compromise failed, Airbnb went to court. According to a recent Bloomberg Law analysis, Airbnb has sued American cities and state governments at least 11 times since 2008. In nine of those lawsuits, the company has claimed immunity from regulation under Section 230 of the Communications Decency Act, which states that users, not digital platforms, are responsible for the content they publish. (Airbnb, which has lost or settled all but two of those cases, described litigation as a “last resort.”)
People inside Airbnb chafe at comparisons to other Silicon Valley villains. “We never wanted to be Uber,” says Conley. But behind the scenes, people familiar with the matter say, Lehane’s bare-knuckle tactics can be divisive. “He’s fucking poison,” a former employee tells me, pointing to an incident in which opposition researchers leaked personal information about New York hotel union boss Peter Ward to the press. “It’s just like this little dark side of the company.” Others speak glowingly of Lehane’s realpolitik, attributing any criticism to his status as a Washington-hardened outsider in a tech world.
If Airbnb has a dark side, it is compartmentalized by its founders. Chesky, Gebbia, and Blecharczyk have all signed the Giving Pledge, committing the majority of their wealth to charity. The company incorporated its Open Homes initiative, which provides housing to aid workers and refugees during natural disasters, as the nonprofit Airbnb.org. When guests complained that they had been discriminated against by racist hosts, Airbnb partnered with the civil rights group Color of Change to promote diversity and eradicate bias from its platform. In San Francisco, where rising rents have contributed to an affordability crisis, Gebbia recently donated $25 million to fight homelessness.
But despite these good works, by the end of the decade Airbnb’s brand had become muddied by the company’s escalating legal battles, undisciplined spending, and headline-grabbing platform issues. A moment of reckoning arrived in October 2019, when five people were killed at a party in an Airbnb in California. A week later, Chesky sent a staff-wide email promising to regain his customers’ trust—and to verify all 7 million Airbnb listings by the end of 2020. Nobody could have guessed that SARS-CoV-2 was about to emerge in China, putting a halt to that work. But Chesky seemed to know that Airbnb, one way or another, would need a reset.
Chesky chooses his words carefully, and one of the stories he tells me (twice) is about a RISD professor who changed his life. “Brian,” the teacher said, “you can do anything you want in life—just not all at the same time.” Chesky remembered the line, but apparently forgot the lesson. “I don’t think the story is unique to Airbnb,” he adds. “An entrepreneur has an idea, they hit on success, and they start thinking, Maybe I can do something else.”
The subtext, which Chesky won’t put so bluntly, is that the coronavirus may have saved Airbnb from itself. At the height of the pandemic, Chesky looked to Apple for inspiration. “They were 90 days from bankruptcy in 1997,” he says. “Jobs took 15 product lines and got it down to four. He went from a business-unit organization to a functional organization.” Airbnb, Chesky concluded, had been doing too many things at the same time. “When the crisis happened, we became functional. We became focused and lean and mean and more efficient.” Or, as a source close to Chesky puts it: “He got religion.”
“Traveling and living are going to gradually blur together,” Chesky explains. “There’ll be a redistribution of travel from a hundred cities to 10,000 cities.”
Chesky describes the company’s restructuring as an educated bet that travel as we know it isn’t coming back—at least not anytime soon. Traditional business travel is dead, he proclaims; in the future, remote workers will book medium-length stays in regional hubs to get face time with their teams. Ditto the obsession with “Times Square” tourism. “Most people don’t miss sitting on a double-decker bus tour, going to a crowded lobby, or getting a selfie in front of the Leaning Tower of Pisa,” Chesky says, predicting a lasting shift in travel toward national parks and small towns. When he calls me, on Zoom, there is a giant illustration of a camping scene framing the wall behind him.
Airbnb execs call this phenomenon “travel redistribution.” “Trips are going to get longer, and traveling and living are going to gradually blur together, because in a world where many people can work from home, they can work from any home,” Chesky explains. “There’ll be a redistribution of travel from a hundred cities to 10,000 cities.” He talks excitedly about a new era of global nomads—white-collar professionals, liberated from their desks by Zoom and Slack, who can work remotely from anywhere for weeks or months at a time. “I thought that would take about 10 to 20 years to happen,” Chesky says. “With COVID, that accelerated it.”
Chesky speaks frequently about “getting back to our roots”—a phrase that is repeated to me by a half-dozen Airbnb sources in a remarkable display of messaging discipline. On its face, the mantra suggests that Airbnb is returning to prioritizing the “everyday people” who list their own homes—an olive branch to hosts frustrated by pandemic-era policies that made it easier for guests to cancel their bookings. Chesky set up a $250 million fund to help cover their 2020 losses and, in another peace offering, announced a billion-dollar endowment to provide financial and educational resources for hosts. A schmaltzy new ad campaign, “Made Possible by Hosts,” reflects the company’s post-IPO marketing blitz to win them back.
Of course, there is subtext for regulators, too. After a decade of political warfare, Airbnb’s shift from cities to “everyday” hosts suggests the possibility of détente—or at least a new equilibrium. “Absolutely we have more tension in urban areas,” Chesky admits. With the pandemic, that dynamic “went from a wind to our face to a wind at our back.” Goodbye Times Square, hello Lake Tahoe.
This is all somewhat convenient for Airbnb, considering that New York, Los Angeles, and Toronto, among other cities, have recently imposed strict limits on short-term rentals (defined as bookings for less than 30 days), leading to a surge in listings being reclassified as long term. In September, Airbnb rolled out City Portal, a dashboard that provides cities with data on short-term rentals and tax revenue, a support hotline, and tools that make it easier for officials to crack down on listings that violate these laws.
“Now that they’re public, they have a hundred billion market cap—I don’t care what the hotels and the unions and the housing people do,” declares one source close to Chesky. “Airbnb is going to win.”
Housing activists are skeptical that Airbnb’s new, softer touch is more than a temporary tactic. “Regulation remains the biggest threat to Airbnb as a business,” says Murray Cox, who has spent years analyzing Airbnb data. “If they go back to what most people think of as ‘home sharing’—either occasionally renting out a home or part of a home—the market would become much smaller.” He points to Airbnb’s hometown of San Francisco, where the number of short-term listings dropped by half after the city began enforcing rules on illegal rentals.
Airbnb’s S-1 filing, which companies must produce before going public, dutifully enumerates these regulatory risks. But ask around, and Airbnb insiders seem unfazed by the company’s legal challenges. “Now that they’re public, they have a hundred billion market cap—I don’t care what the hotels and the unions and the housing people do,” declares one source close to Chesky. “Airbnb is going to win.” He notes that Airbnb, which was once 80% concentrated in 20 cities, is now highly diversified, such that no one city makes up more than 2.5% of the company’s revenue.
“If Long Beach, California, kicks them out, okay, it’s too bad, but it’s not going to matter,” he says. Many tourism-deprived cities are now desperate for the tax revenue and economic activity that Airbnb used to generate. And the pivot to mom-and-pop hosts with a cabin in the Catskills? “It’s spin. When they say they’re getting back to the core of the business, that’s a PR play to respond to the housing activists and the hotel unions.” (Chesky frames it differently: “COVID definitely took a lot of pressure off, but it doesn’t mean that these aren’t really serious issues.”)
Spin or not, it’s evident that Chesky’s rightsized vision for Airbnb is no less ambitious. On the contrary, he seems more committed than ever to expanding Experiences—tourist outings, such as an Indigenous cooking class in Mexico City or a rice paddy tour of Vietnam, which are highly curated. When I ask Chesky about the program, he waxes on about a post-pandemic world in which the collapse of traditional tourism operators leaves a “void” in communities that is filled by Airbnb hosts. “They can offer homes, they can offer experiences,” he says. “We’ve only scratched the surface.”
The more Chesky talks, the less chastened he sounds. Experiences, he suggests, is the solution to the last-mile problem of “belonging anywhere,” to closing the gap between Airbnb as a travel brand and a lifestyle curator able to offer an endless buffet of activities that comprise an Airbnb economy. The company’s S-1 states that Experiences could eventually compete for the $1.4 trillion that consumers spend each year on sporting events, amusement parks, and spas.
The Experiences business, which launched in 2016, was paused during the pandemic, and remains small compared to home and room bookings. An insistence on exclusivity has slowed the program’s growth, as has Chesky’s reluctance to onboard mass-market operators. Airbnb won’t divulge how much money Experiences generates, but there were about 40,000 Experiences listed pre-pandemic, with average earnings of about $2,500 per year, suggesting less than $100 million before expenses.
All that is by design, insists Chesky. He claims to have learned the lesson that it’s better to get one product right than to do too much at once. And he seems emboldened by the notion that innovators who chase mass appeal ultimately lose their edge.
An Airbnb insider recalls trying to convince Chesky that he needed to offer more commercial experiences, like the maligned double-decker bus tour, and getting politely shut down: “He would quote Steve Jobs”—paraphrasing Henry Ford— “saying like, ‘If I built what people wanted, I’d disappoint them.’ ”
Steve Jobs, Henry Ford; it’s an ambitious lineage. Of course, Chesky has already reinvented the travel industry once before. When the economy reopens, we’ll learn whether his latest vision of “belonging anywhere” will reinvent how we work and live as well.
This story is part of The Road Ahead, a series that examines the future of travel and how we’ll experience the world after the pandemic.