Page 74 - Forbes Magazine-October 31, 2018

FORBES BRIAN CHESKY AIRBNB

18 years at Amazon before joining Airbnb in March to run growth has accelerated in 2018. After launching with 500 Ex-
its Homes division, which oversees its core rental business. periences in 12 cities two years ago, there are now 15,000
When he joined Amazon, people wondered if it could sell Experiences in 800 cities around the globe. The company
anything more than books. Now Greeley is at Airbnb when takes 20% of each reservation, which added about $2 million
it needs to execute a similar expansion. “The analogy to 20 in revenue last year. That’s not nothing, but it’s a rounding
years ago and another ‘A’ company is not lost on me,” he says. error for a company the size of Airbnb. According to sources,
“There’s this Amazon-size opportunity of travel out there.” Airbnb spent more than $100 million to develop the product.
But in many ways the Amazon comparison is a stretch. Still, things might be looking up: Forbes estimates Experienc-
Retail is a $5.8 trillion market in the U.S.; much larger than es could hit $90 million in sales this year, leaving Airbnb an
travel, even in its broadest sense. Amazon sells things like estimated $18 million cut. Airbnb disputes both the revenue
books, clothes and garden tools—all mass-produced com- and the loss figures but won’t give specifics.
modities. Airbnb wants to be the exact opposite. “One of
the most popular listings on Airbnb is a mushroom dome,” IN DECEMBER, CHESKY GATHERED HIS cofounders to brain-
Chesky says, referring to a tiny, geodesic-dome-topped cabin storm guidelines that he says will help future decision-mak-
that rents for $130 a night along the California coast. “And ing as the company seeks to follow metrics beyond finan-
unfortunately, no matter how successful it is, we can’t just cials. “If you have a greater responsibility,” Chesky says, “the
make a million more of them. So we’re the kind of business question is, well, who do have responsibility to?”
that has to get into a lot of things, because everything we do For most CEOs, particularly ones looking to go public in
can’t get so big, just by definition, it’s finite.” the near term, investors would be the obvious choice. But
Airbnb’s first big expansion attempt is Experiences, its Chesky is not most CEOs. In addition to looking after inves-
tors, Air bnb will also measure progress with regard to four
additional stakeholders: employees, guests, hosts and cit-
“IF YOU HAVE A GREATER ies. Airbnb hopes this will ease acceptance of some unusu-
RESPONSIBILITY, THE al corporate initiatives, like asking the SEC to allow Airbnb
to grant its hosts stock as if they were employees and to offer
QUESTION IS, WELL, WHO DO them low-cost home improvement loans. But it also reflects
YOU HAVE RESPONSIBILITY a desire to remain true to its communal roots.
“We essentially have the Airbnb community as a virtual
TO?” FOR MOST CEOS, seat at the table, channeled through the founders, to say what
INVESTORS WOULD BE THE are the right things to be doing to be growing,” says Reid
Hoffman, the LinkedIn cofounder and Airbnb investor.
OBVIOUS CHOICE. BUT CHESKY But that sort of inclusion will only become more difficult

IS NOT MOST CEOS. 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
take on the highly fragmented guided-tour market. Just as forward. Instead, it is eyeing going public in mid-2019 at the
Etsy turned crafts into e-commerce and Uber turned anyone earliest. The window will be short: In 2020, a large chunk of
with a car into a private driver, Experiences wants to let any- employee stock options will expire, vaporizing their equity
one from a sous chef to a yogi run an online tour business. overnight.
Still, how big is that market? “The limitation is not in space,” Chesky is visibly squeamish when asked about going pub-
says Joe Zadeh, who runs Experiences for Airbnb. “It’s time.” lic. Too often, he says, companies lose track of the bigger
Launched in November 2016, Experiences has been a picture and settle into a quarterly cadence. “The problem is
slow burn. The original idea of three-day, fully planned-out some people forget they’re climbing the mountain in the first
itineraries was too expensive and time-consuming for Air- place,” he says.
bnb’s budget-travel audience. It switched to shorter options “I’ve met a lot of CEOs that say, ‘I’m very long-term-ori-
but quickly ran into a quality problem. While homes aren’t ented’ or ‘I want to be long-term-oriented,’ but they just have
vetted before they’re listed on Airbnb, that doesn’t work for so many pressures and so many things that are in conflict,”
hosted tours. Homes have basic architectural standards, in- Chesky says. “They say, ‘I want to serve the public interest,’ ‘I
cluding being livable in the first place. Random tours don’t, want to make sure our products are great for the world,’ but
and Airbnb hosts went wild. One of the first Experiences, the only metrics they review at a board meeting are the met-
rolled out when the product was still in beta, turned out to rics about the sales of the product essentially”
be a woman who would yell at guests as they picked up trash Unorthodox words from the CEO of a company that
on a San Francisco beach for an hour. An experience, for might soon go public. Airbnb wants to write the rules to the
sure, but not the kind Airbnb was looking for. game, but it will be up to investors to decide whether they
The need to vet tour guides slowed Experiences down, but are ready to play. F

50 | FORBES OCTOBER 31, 2018