Airbnb was like a family, until the layoffs started

By Erin Griffith

SAN FRANCISCO — On May 5, after almost two months of working alone in his San Francisco apartment, Brian Chesky, Airbnb’s chief executive, cried into his video camera.

It was a Tuesday, not that it mattered because the days had blurred together, 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 coronavirus had 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, a stocky designer from upstate New York, spoke frequently of trustworthiness, authenticity and a desire to build a business that valued principles and people over the short-termism of Wall Street. Gebbia delivered a TED Talk on designing for trust. And Airbnb’s former chief ethics officer, Rob Chesnut, wrote a book called “Intentional Integrity.”

Inside the San Francisco company’s airy, plant-filled offices, the posivibes were also plentiful. Employees surprised one another by raising their arms to form celebratory human tunnels, held dog “pawties” in conference rooms designed to look like actual Airbnb listings and were serenaded on their birthdays by the company’s a cappella group, Airbnbeats. New employees, who were screened for empathy in job interviews, were welcomed “home” and told: “You belong here.”

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 in an interview. “It felt like everything stopped working at the same time.”

From the outside, 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.” At a question-and-answer session about the job cuts later, Chesky and his co-founders offered a standing ovation to the employees they had let go. Clapping and heart emojis from audience members filled the screen.

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.”

A company spokesman said it “has been a difficult time for everyone.” He added, “The more than 5,000 people who work at Airbnb are incredibly motivated and enthusiastic because they believe in our mission.”

Embrace the Adventure, Champion the Mission
Airbnb was built not on a genius technological innovation or a meticulous business school PowerPoint, but on the idea that people might trust one another enough to stay in strangers’ houses. Basically, the goodness of humanity.

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.

As the company grew, Chesky began talking of a world where digital nomads healed divisions with in-person connections.

“I think in the future, people won’t travel — they’ll just be mobile,” he predicted in 2013. “People are going to be living a month here, a few weeks there, four months somewhere else.” Airbnb was not just renting vacation homes, the idea went, it was building a “United Nations around the kitchen table.”

His philosophy crystallized in 2018 when he presented a plan for something called “stakeholder” capitalism. In contrast to Wall Street’s focus on quarterly financial reports and daily stock moves, Chesky aspired to a capitalism that had an “infinite time horizon” and was good for society.

That philosophy imbued many areas of work for Airbnb employees. Part of their performance reviews, for instance, were based on how well they embodied the startup’s core values, three former employees said. “Embrace the adventure” was sometimes used to justify difficult situations, they said, and “champion the mission” was code for putting a positive spin on things. (A company spokesman disputed the characterization.)

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 and planned to submit by late March, went into a drawer.

Instead, Chesky said, he drew up a list of principles for operating in the virus. They included being decisive and emerging “on the right side of history.”

There were stumbles. When guests wanted out of nonrefundable bookings because the pandemic had forced them to change their plans, Airbnb changed its policy to allow refunds. But the move outraged the company’s rental operators, who relied on the income. Chesky eventually apologized for how Airbnb had communicated the decision.

“Was everything done perfectly? No,” said Alfred Lin, an Airbnb board member and investor at Sequoia Capital. “It was about speed and being directionally right.”

Airbnb soon cut $800 million in marketing costs, dropped bonuses and halved executive pay for six months. It also ended contracts with roughly 490 full-time freelancers. With cancellations pouring in and call centers closed because of the virus, Airbnb directed employees across the company, including its recruiters, who had frozen hiring, to assist customers. The backlog took weeks to get through.

In April, the company raised $1 billion in emergency funding, followed by another $1 billion in debt.

Then came the May 5 layoffs. To blunt the shock, Airbnb’s severance packages included three months of salary and a year of health benefits, which was more generous than many other startups doing layoffs.

Chesky has since described a “second founding,” in which Airbnb will be more focused on its core home rental business. It will look different, he said, with fewer customers booking international travel, less flocking to crowded cities, more local trips and more long-term stays.

Dissent in the ‘Airfam’
Two days after the layoffs, the questions came thick and fast in the employee Question and Answer inside Awedience, Airbnb’s virtual meeting software, 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 and why the company couldn’t trim more perks, like its budget for renting office plants.

Chesky said the situation was too uncertain for furloughs and pay cuts, calling those temporary measures. Layoffs were mapped to the future business strategy, he added. A spokesman said the company spent only a small amount on landscaping and related services.

One area hit by layoffs was Airbnb’s safety team, which handles situations like shootings and assaults at its rentals. When a fatal shooting at a party in Orinda, California, made national headlines last fall, the company banned unauthorized parties at rentals and announced plans to confirm that all of its listings were what they advertised.

In the employee Q-and-A, Chesky reiterated past statements that safety was a priority for the company. Workers piped up with written heckles — the equivalent of shouting in a crowded theater — with messages like “Safety was never a priority!” It was an unusual public show of dissent.

Within a week of the layoffs, new safety cases had piled up, two people with knowledge of the situation said. Airbnb asked some laid-off employees to return temporarily to work through the cases, they said. Workers on the regulatory response and payments teams were asked to come back temporarily as well, they said.

An Airbnb spokesman said that the groups focused on user safety were the same size as before the layoffs and that the company assessed its support staffing levels daily. “Brian has always made clear that safety is our priority,” he said.

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.

An Airbnb spokesman said its contractors “were more than contractors, they were our teammates and friends.” He said the company had provided them two weeks of pay and other benefits.

Other issues bubbled up. In a chat room for female Airbnb employees after the layoffs, one laid-off worker described three instances of sexual harassment while at the company, saying that human resources was unhelpful and that co-workers brushed it off, according to an image of the conversation viewed by The Times. The latter, the person wrote, “hurt the most.”

The company said it does not tolerate harassment and discrimination and investigates all claims.

Chesky said he remained optimistic. The company has been promoting signs of recovery, like a growing number of bookings within driving distance and adoption of its “virtual experiences.” In a virtual meeting on Wednesday afternoon, Chesky told Airbnb workers that the company would resume work on its plans to go public.

He also reflected on the last four months, which he said had been “traumatizing in some ways.” The crisis showed him that Airbnb had strayed from its roots as a place for people to connect, and he planned to rectify that.

“Something we can never lose,” Chesky said, “is being true to ourselves, being different, being special.”

Airbnb was like a family, until the layoffs started Airbnb was like a family, until the layoffs started Reviewed by TechCO on 7/18/2020 Rating: 5

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