- Airbnb is facing a big challenge thanks to the coronavirus pandemic, which has led to a deep decline in the travel industry.
- The crisis poses a big test for CEO Brian Chesky, who’s largely a self-taught manager and has little experience to draw from in terms of guiding a big company through an economic crisis.
- Fortunately for Chesky, Airbnb’s board is comprised of seasoned executives who have led companies through similar challenges.
- Among the company’s directors are Kenneth Chenault, who led American Express through the aftermath of the September 11 attacks and the Great Recession, and Angela Ahrendts, who helped turnaround Burberry and guide it through that latter downturn also.
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There are probably few startup founders who are in as much need for guidance and direction from experienced leaders right now as Airbnb CEO Brian Chesky.
The online travel company’s business — like others in the industry — has been hit hard by the coronavirus pandemic. But in addition to just trying to stay afloat, Airbnb has the tricky job of trying to balance that imperative with addressing the needs and interests of the travelers and property managers that use its online marketplace, and without which it wouldn’t have a business.
Fortunately for Chesky, he’s got an assembly of seasoned operators and financial experts on his company’s board of directors. They include Kenneth Chenault, the former CEO of American Express; Angela Ahrendts, who was CEO of fashion retailer Burberry before becoming the head of Apple’s retail division; Alfred Lin, who was chairman of and chief operating officer of shoe retailer Zappos; and Jeff Jordan, who served as the CEO of restaurant reservation company Open Table when it went public.
Until a couple of months ago, this board of directors would likely have been laser-focused on a planned IPO that was expected to value the company at $40 billion or more. Now, the directors must apply their business experience to navigating a crisis instead of a Wall Street debut.
Chesky, 38, now meets every Sunday with his eight fellow board directors, he told the Wall Street Journal.
In this crisis “you’re only focused on this moment, and all I try to do is just get to next week,” Chesky told the Journal.
Interestingly, Airbnb’s board does not technically have an official chairperson or lead independent director, though Chesky effectively serves as the board leader, chairing meetings and handling other functions.
According to some media reports there has been flashes of tension between Chesky and certain directors as the company grapples with the crisis, though Airbnb spokesperson Nick Papas has denied the tensions.
The pandemic has crushed Airbnb’s business
What’s clear is that the board’s ability to collaborate and to leverage its collective wisdom will be put to the test by the pandemic.
With governments around the world having restricted the movement of their citizens to try to contain the coronavirus outbreak, little leisure or business travel is taking place. Thousands of flights have been cancelled and hotel operators have laid off thousands of workers.
Some 90% of reservations with recent check-in dates at Airbnb — which dominates the market — were cancelled, according to industry research firm AirDNA. And new bookings in the United States have fallen by more than half in the last two months.
Several Airbnb directors have gone through experiences similar to what he’s facing. Chenault, for example, took over American Express right before the dot-com bust hit in 2001. He then led the financial giant through the Great Recession. Ahrendts was in charge at Burberry during that downturn. Jordan was heading OpenTable and guided it through a successful initial public offering at a time when few companies were going IPO.
“If I was the CEO, I’d look at [Airbnb’s board] and say, ‘Hey, I’ve got a good, diverse group of people that have been through the ringer. They’ve had a lot of experiences in the past,'” said Harry Kraemer, clinical professor of leadership at Northwestern University’s Kellogg School of Management. “They’ll help them get through that as best as any board I could think of.”
Airbnb’s directors have lots of varied experience
One seeming hole in Airbnb’s board is its lack of someone with direct experience in the travel industry, running a hotel chain, say, or an airline, or another one of the online travel sites, such as Expedia. But that’s maybe not as big a problem as it might seem, said Kraemer.
American Express, which Chennault ran for nearly two decades, is primarily a financial services company, but it does plenty of travel-related things. People can book trips and hotels through it. It has a corporate travel service. And it offers services such as travelers checks and travelers insurance.
“I think of Amex as a travel company,” Kraemer said. “That’s basically what they do.”
But having direct experience in the industry in which a company operates is not necessarily that important for its board members, he said. Indeed, it can be a benefit to have directors who come from other industries, because they often have different ways of looking at problems, he said. And in many cases, the knowledge and experience they have from their own industries can translate to that of the company on whose board they serve.
Prior to becoming a professor, Kraemer was CEO of healthcare firm Baxter International. Among his board members was Fred Turner, who at the time was the CEO of McDonalds. Turner had no experience in the healthcare industry, but he did have experience managing a complex supply chain and operating internationally.
“He was incredibly valuable,” Kraemer said.
The board and Chesky have reportedly been at odds
Crises such as the one playing out right now can lead to a wide range of negative emotions — stress, worry, fear, anxiety — all of which can hamper decision-making and lead to interpersonal conflict. Even companies with well-regarded directors aren’t immune to such problems. Indeed, there has already been a report of tensions playing out at Airbnb in particular.
Airbnb operates a kind of accommodation marketplace, helping travelers who are looking for places to stay connect with property managers with apartments, rooms, and houses. Typically, the company allows property managers to set their own terms for reservations, including their cancellation policies. But after the coronavirus outbreak turned into a pandemic and governments started ordering their citizens to stay in their homes, Airbnb decided to override its hosts’ terms and allow guests to cancel their reservations and get full refunds. The move infuriated many property managers.
It also ticked off some of Airbnb’s directors, because Chesky didn’t inform them before making the change, The Wall Street Journal reported.
Papas, the Airbnb spokersperson, has said Airbnb’s board and management had “extensive discussions” about the cancellation policy change.
But that’s not the only area of reported tension. After being close to breakeven in 2018, Airbnb’s bottom line dipped deeply into the red last year, long before anyone had heard of COVID-19. Chenault and Mather have been pushing Chesky and the company’s management team to cut costs, and have picked up that effort in the wake of the crisis, The Journal reported.
Among the areas Chenault and Mather have been pushing Chesky to cut is Airbnb Experiences, according to The Journal. That offering, which helps travelers book tours, has lost $1 billion, The Journal reported.
Papas has said that instead of telling Chesky to cut the experiences services, Airbnb’s board has encouraged the company to keep investing in it.
Airbnb reportedly told employees last month that it is cutting its marketing expenses and freezing most hiring to conserve costs. It recently raised $2 billion in debt financing — at a high cost — to shore up its bank accounts. Even so, the company faces the prospect of running out of cash in the near future if the travel business doesn’t revive soon.
But tensions aren’t surprising given what’s going on
Some investors are unhappy with Chesky himself, according to The Journal, although it’s unclear if their feelings have been echoed by any members of Airbnb’s board. Those investors have pushed to have Chesky step down, give up some of his voting control over the company, or bring in an executive with experience in turnarounds to help guide him through this period, The Journal reported.
Papas has denied anyone communicated those demands to Airbnb.
Regardless, it’s not surprising nor necessarily concerning for such tensions to be playing out in the company’s board room, Kraemer said. Similar discussions are playing out at lots of other companies right now; they just aren’t getting the same attention as what’s happening at Airbnb, he said. Many companies are facing dramatic declines in their business and are having to make tough choices on how to best move forward. When jobs and product lines and the like are on the line, contentious discussions aren’t unusual, he said.
“The discussion’s going to get heated,” Kraemer said. “I would be amazed if there wasn’t a lot discussions on [how to react to the crisis] and a lot disagreements.”
Here are the members of Airbnb’s board and some of their relevant experiences:
SEE ALSO: Airbnb’s hosts aren’t impressed with the company’s $260 million package to make up for coronavirus cancellations. ‘People see it for what it is — it’s PR.’
Brian Chesky, CEO and cofounder
Chesky famously came up with the idea for Airbnb with then roommate Joe Gebbia in 2007 when they were broke and decided to try to raise some cash by renting out sleeping space on Gebbia’s air mattresses in their apartment. The twosome, along with engineering friend Nathan Blecharczyk, founded Airbedandbreakfast the following year, and Chesky has been the company’s CEO ever since.
A graduate of the Rhode Island School of Design (RISD) with a degree in industrial design, Chesky had no formal management training or experience before starting Airbnb. He reportedly trained himself by reading management books and meeting with various high-profile figures, including Warren Buffett and former CIA Director George Tenet.
Sources: Fortune, LinkedIn, Airbnb
Nathan Blecharczyk, chief strategy officer and cofounder
Blecharczyk met Gebbia when they became roommates, before Gebbia and Chesky roomed together. He joined the Airbnb effort several months after Gebbia and Chesky rented out Gebbia’s air mattresses.
A self-taught coder, Blecharczyk created his own software business when he was in high school, then put himself through Harvard, graduating with a degree in computer science. Like Chesky, he had little management experience before helping start Airbnb. Prior to cofounding the company and becoming its first engineer and chief technical officer, he had worked as a software engineer at several companies.
He now heads Airbnb’s China operations and oversees its global strategy.
Source: The Guardian, Fortune, Airbnb, LinkedIn
Joe Gebbia, cofounder and head of Airbnb’s Samara design team
Gebbia was classmates with with Chesky at RISD, then lured Chesky to San Francisco to become his roommate. Together, they came up with the idea of renting out air mattresses in their apartment.
Like Chesky, Gebbia has a degree in industrial design. He served as Airbnb’s lead designer, helping to design and revamp the company’s website. He now heads Samara, Airbnb’s in-house design studio.
Sources: Fortune, Airbnb, LinkedIn
Alfred Lin, partner at Sequoia Capital
Lin has a long and successful history as a startup investor. At Sequoia, he led the firm’s investments in Uber and Airbnb. Earlier in his career, while a investor at Venture Frogs, a venture firm cofounded, he oversaw investments in Ask Jeeves, TellMe, OpenTable, and Zappos, all of which either went public or were acquired.
But Lin is also an experienced executive. He served as the head of finance or CFO at LinkExchange, TellMe, and Zappos and also served as Zappos’ chairman and chief operating officer. He helped lead TellMe through the dot-com bust to an $800 acquisition by Microsoft, then helped guide Zappos through the Great Recession to a $1.2 billion purchase by Amazon.
Sources: Crunchbase, TechCrunch, The Wall Street Journal, Fast Company, LinkedIn
Jeff Jordan, general partner at Andreessen Horowitz
Like Lin, Jordan has had a successful career as both an investor and executive. He’s been at VC firm Andreessen Horowitz since 2011, leading its investments in Pinterest, Instacart, and Lime, as well as Airbnb.
Prior to joining the venture firm, Jordan was a longtime corporate manager. He served as the chief financial officer of Walt Disney’s retail business until before becoming CEO of DVD seller Reel.com during the late 1990s dot-com boom. He then joined eBay, where he served as general manager of its North American division, helping lead it through the 2001 recession, and then president of its PayPal unit.
Following that he became the CEO of OpenTable, leading it through the Great Recession and its initial public offering in 2009.
Sources: Fortune, LinkedIn, Andreessen Horowitz
Belinda Johnson, Airbnb’s outgoing chief operating officer
Johnson served as Airbnb’s COO until last month; she remains on its board.
She had been in that position since 2018 and originated the COO role. Prior to that, she had served as its top legal officer since 2011 and was its chief business affairs officer since 2015.
Johnson has a long history in the tech industry, mostly serving as a top legal official. Before Airbnb, she had worked at Yahoo since 1999, ending her career there as a senior vice president and deputy general counsel. While there, she and the company went through both the dot-com downturn and the Great Recession.
She joined Yahoo when it bought Broadcast.com, where she had served as general counsel, helping lead it through its initial public offering.
Sources: Vogue, Airbnb, LinkedIn
Angela Ahrendts, former head of retail at Apple
In part because of her former role at Apple, Ahrendts is one of the most well-known figures in the retail industry.
Ahrendts took over the smartphone maker’s retail division in 2014, becoming a senior vice president at the company. She helped the company launch the Apple Watch and reshape itself into more of a luxury brand.
But she had a long career in the fashion industry before that, with stints at Donna Karan International, Henri Bendel, and Liz Claiborne before becoming CEO of Burberry in 2006. She helped revitalize that company and led it through the Great Recession, where it emerged stronger than ever.
Sources: Business Insider research, LinkedIn
Kenneth Chenault, chairman of General Catalyst and former CEO of American Express
Chenault spent nearly his entire career at American Express. He joined the company in 1981, and soon took over and revived its troubled merchandise services business. He rose through the ranks at the company, becoming its president and chief operating officer in 1997 before becoming its CEO in 2001.
Soon after taking the top role at the company, Chenault had to deal with two big challenges, the dot-com downturn and the aftermath of the September 11 attacks, which throttled the travel industry and much of American Express’ business. He helped the company bounce back and then led it through the Great Recession, which was perilous for financial services firms like his.
Since 2018, he has served as the chairman and managing director of venture firm General Catalyst. He’s also served on numerous corporate boards. He recently stepped down as a director of Facebook, reportedly after disagreements with CEO Mark Zuckerberg, and will be replacing Bill Gates as a director on the board of Berkshire Hathaway.
Sources: CNBC, Encyclopedia Britannica The Wall Street Journal, Reuters, LinkedIn
Ann Mather, director at Alphabet and Netflix and former CFO at Pixar
Mather is a longtime fixture on Silicon Valley boards. In addition to being a director at Airbnb, she serves on the boards of Netflix (since 2010), Alphabet (since 2005), mobile gaming firm Glu Mobile (since 2005), Shutterfly (since 2013), and Arista Networks (since 2013).
Mather served as Pixar’s chief financial officer from 1999 to 2004. Prior to that, she was the CFO at Village Roadshow Pictures.
Sources: SEC filings, corporate websites.
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