“Someone once said, ‘Numbers are the language of business.’ No, that’s not it. Language is the language of business,” said Brian Chesky, co-founder and CEO of Airbnb. “The most important thing is that creativity doesn’t have to drive everything. It is that it must be in the room. It should be in the conversation.”
In this week’s Most Innovative Companies Podcast (can’t access a link), Chesky shares how he survived both the financial crisis and a pandemic to build an iconic brand with lasting strength. In a world where very few creative people run large companies, Chesky has accomplished something very different.
With $3 billion in free cash flow in the past 12 months (when they were a break-even company before that), Airbnb has achieved unicorn status three times over by being obsessed with ideas, creativity, and customer experience rather than money. “Running a business in a design-oriented way is actually good for business,” Chesky says. “They are not at odds with each other.”
But how did Airbnb get to where it is today? It was not an easy road, nor a straight one. Chesky tells the Airbnb story in three chapters:
Chapter one of Airbnb
The first chapter begins with the founding of Airbnb. Shortly after receiving his degree in industrial design from the Rhode Island School of Design (RISD), Chesky moved from Los Angeles to San Francisco in 2007 when a former classmate suggested we start a company together. It took perseverance and more than a few credit cards, but they got it off the ground. In addition, Chesky has gotten Airbnb on international maps, hired executive teams and added layers to the company. By all accounts, they were on a rocket ship, preparing to make the company public about ten years after its founding.
Chapter Two of Airbnb
This is where the second chapter of Airbnb’s story begins. In its pursuit of an IPO, Airbnb began to model itself on companies like Amazon.
“We had the pressure to go public on the horizon. So I probably did the opposite of what I should have done. Instead of relying on what made us different, we started to become a pretty conventional company,” he says. Chesky.
The result was a company saddled with more than 10 departments, each with its own subdivisions and each heading elsewhere. “We had leadership issues, process issues, and people complained about how hard it was to get work done,” Chesky says.
There was no central message, no real strategy, he says. That continued for a few years until the end of 2019, when Chesky, thanks in part to a bad dream, concluded that his business was not going in the direction he wanted.
But as much as he knew he wanted to do things differently, they had already written the S1, moving forward in January 2020 as the first signs of the COVID-19 pandemic began to appear. “I remember innocently saying in a meeting, ‘Wow, if this thing spread outside of China, it would be really bad.’ Well, within eight weeks our turnover fell by 80%.”
Chapter Three of Airbnb
That 80% drop would be his defining moment as CEO and the start of Airbnb’s third chapter.
“Every crisis is an opportunity,” Chesky says. “If you think you’re screwed, everyone else will think they’re screwed. But if you are hopeful and optimistic and [don’t offer] blind optimism that people cannot trust, but [instead offer something] rooted in a reality, then people will have resilience and creativity to carry on. And that became this moment, this battle cry.”
Based on Apple’s legendary near-bankruptcy moment in 1997, Chesky returned to his designer roots and redesigned Airbnb into the much smaller company it is today. He took over the 10 divisions and closed almost all of them, restoring the company to a functional organization with one marketing department and 40% less staff due to layoffs and turnover.
“We took a billion dollars in marketing – mostly performance marketing – and we turned it off, and you know what happened? Almost nothing. And we realized that our brand is stronger and more differentiated, and we’re going to differentiate ourselves. We’re going to be less We’re going to be fully functional,” he says. “And we became a fully creatively run company.”
After realizing that autonomy could actually be discouraging (empowering?), he put the entire company on a single roadmap and stopped deriving metrics. Now software releases happen twice a year and emphasize feature marketing as opposed to brand marketing or performance marketing. Strong ideas benefit from the support of the entire organization.
The next chapter of Airbnb
As Airbnb enters its fourth chapter, they have over six million listings, four million hosts, and one billion guests, and that’s not the issue yet. In short, Airbnb has accomplished a lot since 2008, including an IPO in the midst of a global pandemic. In all that time, they have been counted more than once. In the beginning, many argued that the idea was doomed to failure; while years later the headlines claimed that COVID-19 would spell the end. It turns out that the “worst idea that ever worked” still works – fueled by creative thinking and the intent to design and deliver what people want, which begs the question: why aren’t more creatives at the helm? of Fortune 500 companies?
Listen to the episode for the full conversation.
James Vincent is the guest host of londonbusinessblog.com’s Most Innovative Companies podcast. He is also a partner and CEO of FNDR where he helped founders of some of the world’s largest companies, including Airbnb and Snap, use the power of stories to give voice to their vision. Before FNDR and for more than a decade, James worked with Steve Jobs to build the Apple story.