The humble beginnings of Airbnb have been shared time and time again.
Two buddies from RISD, Brian Chesky and Joe Gebbia, needed money to pay their rent in San Francisco, so they invited (and charged) guests attending a conference in town to stay on airbeds in their home.
The situation wasn’t glamorous, but it sparked an idea: “An impossible idea," Airbnb co-founder Gebbia says. "When we started, people didn't believe in us or the [home-sharing] idea. They thought it was crazy."
Nevertheless, the startup - then known as Airbed & Breakfast - launched amid the Great Recession of 2008, and this week, Airbnb marked a milestone by making its debut on the New York Stock Exchange.
And quite a debut it was: Airbnb opened trading at $146, an increase of nearly 115% over its initial public offering price of $68. Its market capitalization sits at $101.6 billion, which, according to The New York Times, is greater than Expedia Group and Marriott International combined.
"It's incredibly emotional for me," Gebbia says of the occasion. "I think about how fortunate we really are to be on this journey for 13 years, to have this idea in my living room with Brian all those years ago and have it transcend to seven million living rooms in 220 countries with hosts that have earned $110 billion over that period of time - it's a lot to take in.”
Of course, this year has been a lot to take in for a number of reasons.
“Going public in the middle of the pandemic, as a travel company, sort of seems like an oxymoron. But we have shown that people inherently have a desire to travel,” Gebbia says.
“I think that's the big through line here – that travel is not going away, but how we travel is certainly changing, and we witnessed that firsthand.”
Below, Gebbia speaks to Airbnb's achievements, how it has adapted during the pandemic and the company’s long-term vision. The conversation below has been lightly edited for length and clarity.
Reports Thursday morning stated that Airbnb could be on track to be worth more than $100 billion. What's your comment on that?
I can't speak to our valuation or speculation around that. But I can say we're really thankful, that we're focused on our community and focused on our hosts and making our product better every day.
Airbnb CEO Brian Chesky has spoken much of building Airbnb as a “21st Century Company” and an “infinite time horizon” – given the events of 2020, what does that mean to you now?
I don't think it's changed. I think it's [the same] from when Brian first talked to you. It's really shifting from a shareholder-first philosophy to a stakeholder-first philosophy, and that doesn't change in a pandemic, that doesn't change by being public.
In fact, I think those things only get enhanced. This year we had a chance to really think deeply about how we serve our stakeholders. For our guests, as you know, we issued refunds during the pandemic at the interest of public health. For our hosts, we had our $250 million fund that we put together for them to help buffer the cancellations they were receiving.
The IPO is not the end of anything. It's not the beginning of anything. It's just a moment in time.
Joe Gebbia - Airbnb
For our employees, we were very thoughtful in the reduction in force that we did earlier this year, making sure that we did everything we could to take care of people and help them find a job somewhere else.
For our investors, we took care of them just by taking out the loans that we did to make sure that we're set up financially for whatever was going to unfold this year.
Then for the communities we serve, I was really proud to see our hosts step up for frontline responders on what is now Airbnb.org. [Gebbia is chairman on the nonprofit.] That's the arm of Airbnb where hosts can offer places to stay at a discount or for free to those in times of crisis.
I think this year was actually a moment in time where we actually got to put the rubber to the road and bring to life this idea of how you actually serve all stakeholders.
Can you expand on how you actually serve all stakeholders?
One of the things that we know is that hosts - the thing that they want the most more than anything else is just to get the business back. That became a strong focus for us - what can we do to help capture this new demand that's out there around domestic travel and this idea of people traveling nearby.
We created the Go Near campaign that we unveiled early in the summer, and we updated our product to reflect local places that you could discover and book very easily. We saw this sort of started to change May 17 to June 6, about a three-week period. We had as many people using Airbnb during that three-week period as we did in the same three-week period of 2019. I think that was just the beginning of a summer of people really finding new ways to travel.
The other things that changed is that people are staying nearby and they're also staying for longer. We saw an increase in our long-term stays. It's a really interesting trend to track. It’s people booking nearby, but also staying for a month-plus, a couple of months-plus, and in doing so I think people kind of realized: “I don’t have to be in a certain city, and I don't have to commute to an office anymore. I have to flip open my laptop and get on the internet, Zoom with people. I can do that from anywhere.” I think it's really untethered people in a way that frees them up to think, “Well, where would I want to live? Where would I want to take my family because my kids aren't going to school, they're also learning over Zoom?”
Airbnb is more than just a vacation; it's actually workplace, it's also where kids get educated. We started to see the lines blur between what's travel and what's just living, I think we're in a really interesting position to capture this new behavior around where people want to be and what they want to do when they travel on Airbnb.
You mention longer-term stays: How do you deal with impact of longer stays on your inventory, since it takes properties off the platform for a longer period of time?
We’ve been doing long-term stays this whole time. I think they just accelerated this year. I think upwards of 10% of our nights have always been long-term stays. So it's not a new thing for us. It's just now it's sort of accelerating.
What I've learned through our company having been created during the Great Recession in 2008 and 2009 is that we are an incredible tool for people to make ends meet in tough economies. We’re also a great platform for people in great economies, because they've got the means to go travel. Whatever the economic conditions are, we're well-positioned to be there for people to meet them where they are.
So how does that translate? Well, in this case, like we learned in 2009, people, our hosts, were very open-minded about this idea of, “Oh, maybe I could open up my home. Maybe I could list on a the site Airbnb to help make ends meet.”
How else have you seen people traveling differently this year?
[The pandemic] didn't stop people from wanting to travel - so what do they do? They said, “Well, we've got to get out of the house.” Somehow, you have to change the context, especially if you have kids. People said, “Let's go near, let's go somewhere close by.” And that means a tank of gas in the car, or an electric charge in the vehicle.
The “staycation” has become, I think, the theme of this year. And we were uniquely poised to adapt to that. Our host community responded very quickly to things like our enhanced cleaning protocols, and our products adapted very quickly to this new behavior around domestic travel. We updated the apps and the website to reflect that.
Subscribe to our newsletter below
We made it really easy for guests to find places nearby, places maybe they didn't even know about before. Maybe [people were] thinking about going to Italy in the past, and they kind of overlooked what's in their own backyard. We really elevated and highlighted the wonderful gems all around us.
It’s been an incredible - some people describe it as a comeback of sorts. I think that we just feel really, really lucky that we are where we are. [The IPO] is really a milestone on a much longer path. It’s not the end of anything. It's not the beginning of anything. It's just a moment in time. For me, it's really just time to say thanks.
In 2018, Brian specifically named Expedia and Booking.com as Airbnb’s top competitors. As a now-public company, how do you view Airbnb’s position among these major travel brands?
We generally don't talk about competitors, but I think we just try to stay focused and execute on the vision and the strategy that we're after. We absolutely respect others who are in the travel and tourism industry. We can tell you that we built a strong community and we're going to keep working to grow that community and support all our stakeholders.
Is there a timeline to resume efforts in transportation or resume investments in categories like Hotels that were put on pause due to the pandemic?
I have nothing to comment on at this time. We’re focused on the core hosts. We’ve refocused the company back to our roots, back on core hosting.
Can you share strategies to bring more hosts to the Airbnb platform?
What’s been true for us time and time again, since the early days through 13 years later, is the power of word of mouth for us. We see the most successful hosts on our platform came because someone they knew invited them to participate. Someone shared their story.
Travel is inherently something that you want to talk about, right? You take a trip, you come home and say, “Oh my gosh, let me tell you about this Airbnb I stayed at in this really cool local village in the middle of the countryside of Italy.” It’s easy to talk about our site because it's so interesting. The stories that people experience when you go travel fuels this word of mouth. That's been one of our strongest growth [methods] for hosts.
How is this moment affecting you personally?
I just feel just so grateful. I mean, we've sort of defied the odds here, right? It was an impossible idea. When we started, people didn't believe in us or the idea. They thought it was crazy. Said it'll never work at scale. I can't tell you how many times I heard that in the early days. We got rejected, we faced a lot of rejection.
In true entrepreneurial form, an entrepreneur turns rejection into an invitation to keep going. And that's exactly what we did. We said, “You know what? We hosted guests ourselves firsthand. We know the magic of what it feels like to host and be hosted.” So we believed that other people one day will see this as well and recognize the magic in this.
I have a backstory for you. I've done some informal research over the years on the history of hospitality, and it's worth noting that home-sharing goes back millennia. Since there were homes, people have been sharing them with each other and there's different codes of hospitality that exist all over the world that date back, in some cases, over a thousand years.
In India, there's a phrase called “Atithi Devo Bhava.” It means “the guest is God.” And that's that's in Sanskrit. In Greece, they have the goddess Xenia, who informed Athenians that if somebody knocks on your door, even if you don't know them, you're obliged to take them in, provide a room in a meal. And only then can you ask who they are and why they're traveling.
In Pakistan and parts of Afghanistan, there's a concept called Pashtunwali, which informs that if somebody knocks on your door, you were obliged to provide for them, even if they're an enemy. These codes – it’s really interesting. Every culture has codes about taking in the other, about providing for each other.
All we've done is brought that back in a modernized form. We’ve been able to do something that humans have been doing in an easy, fun and convenient way over the internet.
We could all probably benefit from being more welcoming to one another.
You're absolutely right. I think going through this pandemic, it hasn't changed - people's fundamental need for connection and belonging. So to answer what we're doing next, it's to double down on that. How do we continue to innovate on new ways, find new models, spark new ideas that ensure our platform enables connection and belonging all over the world?