Inside Airbnb, employees eager for big payouts pushed it to go public
Tension has grown among a 6,000-person work force as it waits to sell company shares, people with knowledge of the situation said.
Last summer, several Airbnb employees wrote a letter to the online room-rental start-up’s founders.
On behalf of more than a dozen employees, they pleaded to be able to sell their Airbnb stock options. Because Airbnb is privately held, its shares cannot be easily traded or cashed in. So the employees also asked that the company go public, a move that would let them freely sell their shares, said five people who saw or were briefed on the document and were not authorized to speak publicly.
The letter was a sign of the tension that has built up among Airbnb’s workers.
According to interviews with more than a dozen current and former employees and investors, most of whom declined to be identified for fear of retaliation, Airbnb’s 6,000-person work force has become increasingly frustrated by not being able to cash in the company stock that was received in compensation packages. Waiting for the startup to go public has become a growing source of stress, many said, preventing some from making career changes, starting a family or moving on with their lives.
Questions about going public have risen to the top of an internal message board where employees vote for topics for executives to address every few months, the people said. The discontent has been exacerbated because Airbnb, which has been valued at $31 billion, doled out two tranches of employee equity that are set to start expiring in November 2020 and in mid-2021; those shares will become worthless if the company is not trading publicly by then, they said.
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To try to keep employees happy, Brian Chesky, Airbnb’s chief executive, and other top executives have made some adjustments, the people said. They began offering sabbaticals to longtime employees, extended Airbnb’s parental leave policy and increased the retirement matching program. They also created a program to provide low-interest general-purpose loans of hundreds of thousands of dollars to employees. In performance reviews this spring, the startup issued higher bonuses and raises, one of the people said.
On Thursday, Airbnb took the biggest step of all: It released a one-sentence announcement saying it planned to go public next year.
“We are deeply committed to our employees, and our focus on the long-term has helped build a company that is highly successful and true to our mission and values,” Chris Lehane, Airbnb’s senior vice president for policy and communications, said in a statement. He added that Airbnb was consistently ranked as a great place to work “because of the spirit, energy, values and morale of our employees.” He declined to comment on the employee letter.
Vivek Wagle, a marketing executive who left Airbnb in 2014, said Thursday’s announcement “was definitely welcome news for a lot of us early employees, who may have been wondering whether we’d be rewarded for our part in the company’s success.”
Airbnb’s situation illustrates a paradox of the startup dream. Many tech workers join fast-growing privately held companies with the hope of gaining stock in the firms and converting those shares to riches when the start-ups go public. But employees are dependent on the company’s founders and board before that can become a reality.
Mr. Chesky, who co-founded Airbnb in 2008, has been vocal about not rushing to take it public. In January 2018, he published a letter saying the company will have an “infinite time horizon.” He is now exploring a nontraditional initial public offering by potentially listing the shares directly, or on the Long-term Stock Exchange, which is backed by venture capital but not yet operational, three people with knowledge of the situation said.
Doug Leone, a venture capitalist at Sequoia Capital, one of Airbnb’s backers, said that while start-ups had “an implied social contract” to go public at some point, there was no rush for them to do so. “The I.P.O. is just a moment in time,” he said.
Yet Mr. Chesky’s go-slow stance has become problematic as other high-profile startups of the same generation as Airbnb have started listing their shares on the stock market. This year, the ride-hailing companies Uber and Lyft, the online pinboard company Pinterest and the business software maker Slack are among those that have gone public. That has allowed their employees to cash in their shares.
Employee tension is unusual for Airbnb, known for its cheery mission of “belong anywhere” and for fostering a kumbaya culture among its staff. The company has grown rapidly, with more than seven million listings in 100,000 cities. In the second quarter, its revenue exceeded $1 billion. Many employees work out of an airy building in San Francisco, which features rooms that replicate its famous listings. Several former employees said they were grateful for the windfall they would eventually receive from their shares.
But any reward from owning Airbnb stock has been held back. Starting in 2011, when the young company topped a $1 billion valuation, Airbnb prohibited workers from selling shares, while allowing its three founders — Mr. Chesky, Nathan Blecharczyk and Joe Gebbia — to cash out a total of $21 million.