Unravelling of AIRBNB: Just like a family, until the layoffs start

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 start-up. 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 centre of belonging is love.” Within a few hours, 1,900 employees — a quarter of Airbnb’s work force — were told they were out.

The moves thrust Airbnb into the centre 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? Start-ups that sell everything from mattresses to data-warehousing software have long used “making the world a better place”-style mission statements to energise 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 start-up grew quickly as an online platform that helped homeowners rent out rooms to travellers. Along the way to a $31 bn 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.

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.

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 one 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 said in interviews that they had experienced a sudden disillusionment when the carefully crafted corporate idealism cracked.

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, Chesky told Airbnb workers that the company would resume work on its plans to go public. 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.”