30 THE MACALLAN
Stories of Gratitude from Exceptional Business Leaders
Behind the success of each young entrepreneur, founder and executive is the often untold story of an instrumental person who helped them reach new heights. In partnership with The Macallan, we asked Forbes Under 30 listmakers to express their gratitude to those who have inspired and guided them in their careers.
18 years at Amazon before joining Airbnb in March to run its Homes division, which oversees its core rental business. When he joined Amazon, people wondered if it could sell anything more than books. Now Greeley is at Airbnb when it needs to execute a similar expansion. “The analogy to 20 years ago and another ‘A’ company is not lost on me,” he says. “There’s this Amazon-size opportunity of travel out there.”
But in many ways the Amazon comparison is a stretch. Retail is a $5.8 trillion market in the U.S.; much larger than travel, even in its broadest sense. Amazon sells things like books, clothes and garden tools—all mass-produced commodities. Airbnb wants to be the exact opposite. “One of the most popular listings on Airbnb is a mushroom dome,” Chesky says, referring to a tiny, geodesic-dome-topped cabin that rents for $130 a night along the California coast. “And unfortunately, no matter how successful it is, we can’t just make a million more of them. So we’re the kind of business that has to get into a lot of things, because everything we do can’t get so big, just by definition, it’s finite.”
Airbnb’s first big expansion attempt is Experiences, its take on the highly fragmented guided-tour market. Just as Etsy turned crafts into e-commerce and Uber turned anyone with a car into a private driver, Experiences wants to let anyone from a sous chef to a yogi run an online tour business. Still, how big is that market? “The limitation is not in space,” says Joe Zadeh, who runs Experiences for Airbnb. “It’s time.”
Launched in November 2016, Experiences has been a slow burn. The original idea of three-day, fully planned-out itineraries was too expensive and time-consuming for Airbnb’s budget-travel audience. It switched to shorter options but quickly ran into a quality problem. While homes aren’t vetted before they’re listed on Airbnb, that doesn’t work for hosted tours. Homes have basic architectural standards, including being livable in the first place. Random tours don’t, and Airbnb hosts went wild. One of the first Experiences, rolled out when the product was still in beta, turned out to be a woman who would yell at guests as they picked up trash on a San Francisco beach for an hour. An experience, for sure, but not the kind Airbnb was looking for.
The need to vet tour guides slowed Experiences down, but growth has accelerated in 2018. After launching with 500 Experiences in 12 cities two years ago, there are now 15,000 Experiences in 800 cities around the globe. The company takes 20% of each reservation, which added about $2 million in revenue last year. That’s not nothing, but it’s a rounding error for a company the size of Airbnb. According to sources, Airbnb spent more than $100 million to develop the product. Still, things might be looking up: Forbes estimates Experiences could hit $90 million in sales this year, leaving Airbnb an estimated $18 million cut. Airbnb disputes both the revenue and the loss figures but won’t give specifics.
in december, chesKy gathered his cofounders to brainstorm guidelines that he says will help future decision-making as the company seeks to follow metrics beyond financials. “If you have a greater responsibility,” Chesky says, “the question is, well, who do have responsibility to?”
For most CEOs, particularly ones looking to go public in the near term, investors would be the obvious choice. But Chesky is not most CEOs. In addition to looking after investors, Airbnb will also measure progress with regard to four additional stakeholders: employees, guests, hosts and cities. Airbnb hopes this will ease acceptance of some unusual corporate initiatives, like asking the SEC to allow Airbnb to grant its hosts stock as if they were employees and to offer them low-cost home improvement loans. But it also reflects a desire to remain true to its communal roots.
“We essentially have the Airbnb community as a virtual seat at the table, channeled through the founders, to say what are the right things to be doing to be growing,” says Reid Hoffman, the LinkedIn cofounder and Airbnb investor.
But that sort of inclusion will only become more difficult after an IPO. Airbnb had been searching for a way to remain private forever, but after talking with Morgan Stanley in the fall of 2017, the company realized there isn’t a private path forward. Instead, it is eyeing going public in mid-2019 at the earliest. The window will be short: In 2020, a large chunk of employee stock options will expire, vaporizing their equity overnight.
Chesky is visibly squeamish when asked about going public. Too often, he says, companies lose track of the bigger picture and settle into a quarterly cadence. “The problem is some people forget they’re climbing the mountain in the first place,” he says.
“I’ve met a lot of CEOs that say, ‘I’m very long-term-oriented’ or ‘I want to be long-term-oriented,’ but they just have so many pressures and so many things that are in conflict,” Chesky says. “They say, ‘I want to serve the public interest,’ ‘I want to make sure our products are great for the world,’ but the only metrics they review at a board meeting are the metrics about the sales of the product essentially”
Unorthodox words from the CEO of a company that might soon go public. Airbnb wants to write the rules to the game, but it will be up to investors to decide whether they are ready to play.
“IF YOU HAVE A GREATER RESPONSIBILITY, THE QUESTION IS, WELL, WHO DO YOU HAVE RESPONSIBILITY TO?” FOR MOST CEOS, INVESTORS WOULD BE THE OBVIOUS CHOICE. BUT CHESKY IS NOT MOST CEOS.