South Florida Sun-Sentinel Palm Beach (Sunday)
Airbnb was like family until layoffs
Pandemic pushed rental startup, others into a harsh reality
SAN FRANCISCO — On May 5, after almost two months of working alone in his San Francisco apartme n t , B r i a n C h e s k y, Airbnb’s chief executive, cried into his video camera.
It was a Tuesday, and Chesky was addressing thousands of his employees. Looking into his webcam, he read from a script that he had written to tell them that the c o ro n av i r u s h a d crushed the travel industry, including their home rental startup. Divisions would have to be cut and workers laid off.
“I have a deep feeling of love for all of you,” Chesky said, his voice cracking. “What we are about is belonging, and at the center of belonging is love.” Within a few hours, 1,900 employees — a quarter of Airbnb’s workforce — were told they were out.
The moves thrust Airbnb into the center of a growing debate in Silicon Valley: What happens when a company that has positioned itself as family to its employees reveals that it is just a regular business with the same capitalist concerns — namely, survival — as any other?
Startups that sell everything from mattresses to data-warehousing software have long used “making the world a better place”-style mission statements to energize and motivate their workers. But as the economic fallout from the coronavirus persists, many of those gauzy mantras have given way to harsh realities like budget cuts, layoffs and bottom lines.
That now puts companies with a “commitment” culture at the highest risk of losing what made them successful, said Ethan Mollick, an entrepreneurship professor at the University of Pennsylvania’s Wharton School.
“Part of the compensation is being part of this family,” Mollick said. “Now the family goes away, and the deal is sort of changed. It just becomes a job.”
In many ways, Airbnb was the ideal example of a commitment culture company. Founded by Chesky, Nathan Blecharczyk and Joe Gebbia in 2008, the startup grew quickly as an online platform that helped homeowners rent out rooms to travelers. Along the way to a $31 billion valuation, it built a reputation as the polar opposite of its sharing economy peers such as Uber, which prized ruthless competition, and WeWork, which collapsed under a partying culture and its founder’s self-dealing.
Instead, Airbnb stood for earnest idealism. Chesky, 38, spoke frequently of trustworthiness, authenticity and a desire to build a business that valued principles and people over the short-termism of Wall Street.
Inside the San Francisco company’s offices, the posivibes were also plentiful. Employees surprised one another by raising their arms to form celebratory human tunnels, and held dog “pawties” in conference rooms designed to look like actual Airbnb listings.
So in March, when the coronavirus hurtled in, the rupturing of the “Airfam” was painful. Airbnb, which had been on track to go public this year, suddenly faced an avalanche of travel cancellations. Revenue evaporated. Weeks later, Chesky announced the layoffs and scaled back the company’s ambitions.
“Everything that kind of could go wrong did go wrong,” he said. “It felt like everything stopped working at the same time.”
From the o u t s i d e, Airbnb’s commitment culture appeared intact.
Chesky’s layoffs script, which was published on the company blog, got more than 1 million views and was praised as compassionate, empathetic and a “lesson in leadership.”
But more than a dozen current and former Airbnb employees, most of whom declined to be identified because they had signed nondisparagement agreements with the company, said in interviews that they had experienced a sudden disillusionment when the carefully crafted corporate idealism cracked.
Kaspian Clark, 38, who worked in customer support in Portland, Oregon, for around two years, said he had fully bought into Airbnb’s mission and felt denial and grief when he was let go.
“There are a lot of people who feel very betrayed by this,” he said. “I deeply hope that Airbnb is able to remain the thing that I believed in.”
Airbnb was built on the idea that people might trust one another enough to stay in strangers’ houses.
Its network of home rentals quickly spread across the United States and into almost every country. Airbnb raised more than $3 billion in venture capital and expanded into activities, luxury vacations, experiments with flights and even a print magazine.
Airbnb’s rental listings grew from 2,500 in 2009 to 7 million this year. The company landed funding from top venture firms including Andreessen Horowitz, Founders Fund and Sequoia Capital. Its valuation, which topped $2 billion in 2012, skyrocketed to $31 billion by 2017. An initial public offering this year was set to make its executives, investors and employees rich.
Enter the virus. As travel ground to a halt in March, Airbnb cut its 2020 revenue projection to less than half of the $4.8 billion it hauled in last year. Its IPO filing, which Chesky had been tweaking with ideas for stakeholder capitalism, went into a drawer.
Two days after the layoffs, the questions came thick and fast in the employee Question and Answer session, according to five people who attended.
Some workers asked why there weren’t furloughs or broader pay cuts instead of layoffs. Others asked why certain groups had been chosen for cuts.
Chesky said the situation was too uncertain for furloughs and pay cuts, calling those temporary measures.
Later, on a Slack channel for former employees, some lamented that Airbnb was gutting its culture, according to messages viewed by The New York Times. In June, an Airbnb contractor who had recently been let go wrote an editorial for Wired that quoted peers calling the company “hypocritical” for its “remarkably callous” treatment of contract labor during the pandemic.