Brian Chesky speaks with CNBC’s “Squawk on the Street” today on the company’s IPO, and the impact of the pandemic on the business and the IPO.
WHEN: Today, Thursday, December 10
Odey's Brook Absolute Return Fund was up 10.25% for the third quarter, smashing the MSCI World's total return of 2.47% in sterling. In his third-quarter letter to investors, which was reviewed by ValueWalk, James Hanbury said the quarter's macro environment was not ideal for Brook Asset Management. Despite that, they saw positive contributions and alpha Read More
WHERE: CNBC’s “Squawk on the Street”
Following is the unofficial transcript of a CNBC interview with Airbnb co-founder and CEO Brian Chesky.
Airbnb CEO Brian Chesky on IPO ahead of the first trade
Airbnb co-founder and CEO Brian Chesky also spoke with “Squawk Box” earlier today for a separate interview and following are links to video on CNBC.com:
Airbnb co-founder and CEO on starting the company
Airbnb CEO on how the pandemic impacted business and the IPO
All references must be sourced to CNBC.
DEIRDRE BOSA: Hey Carl, thanks for that. And hello Brian, good morning. What a wild year it's been.
BRIAN CHESKY: Oh my god, it's been quite a year. I did not think when this year started it would be like this.
BOSA: Yeah, neither did I. To be honest, at one point, not that long ago you saw your evaluation slash to some $18 billion. You priced above your range though you're looking at an evaluation right now of $47 billion. Do you as CEO and what you'll have to deliver worry that valuations have gotten out of hand?
CHESKY: You know, I don't think I'm gonna worry much more than in April and May when we saw our business drop 80% in eight weeks in the middle of a pandemic. So, I'm just, I just want to say I'm so grateful to be here today, so fortunate and I wouldn't be here if it hadn't been for all the people who helped us, our guests our hosts and everyone who helped build Airbnb.
BOSA: At the same time, Brian, those heightened expectations and this really hot IPO climate that we find ourselves in that could perhaps lead you, or expectations to grow quicker than you had planned and this year as we've talked about has really been a year of cost cutting. You guys had to lay off about a quarter of your workforce. So, what is next year look like? Do you bring back some new priorities, ramp up investments that you scaled back this year?
CHESKY: Well, I mean, this year, one of the things we had to do is get really focused and we've gotten focused on our core host community that offers homes and experiences. And, you know, when the world is ready to travel again, we will be ready. And so, we are focused on making sure that our hosts are ready to welcome guests, when they're ready to leave their houses and it's safe to do so and so, I mean, we are ready regardless of what happens with this IPO. We are going to be ready.
BOSA: Right and so, as you look ahead to next year in 2022 as the economy reopens and people do travel again, what are you prioritizing in terms of the business?
CHESKY: Well, you know, once again, like when I started Airbnb with my two co-founders, we are in a recession. And we think that millions of people are going to turn to Airbnb for economic assistance and I think hosting could be a benefit so we want to really help unlock hosting all over the world. And then we want to continue to make our product much easier. You know now people are coming to Airbnb, they don't even necessarily have a destination in mind or dates because they're flexible. We're all obviously on Zoom and so people are saying I want to go anywhere 300 miles around me, what can you show me? And so now we're going to be getting a little bit more in the game of inspiration and matching people to the perfect home and experience for them.
BOSA: Right, but it sounds like you're still going to be focusing on your core which is home-sharing again. This year, you did scale back on some of those other projects like real estate and hotel listings. But something that you didn’t scale back on was experiences. It sounds like you guys are still moving full-fledge ahead however we didn’t get a whole lot of detail regarding experiences in the S-1. Is this something that you plan on giving more to investors, the level of profitability, how much in terms of revenue experiences takes up, what terms of investment you're looking at for this unit?
CHESKY: Yeah, I mean over time we will continue to share more about experiences and I will just say, you know, in life, timing is everything and I thought this was going to be a breakout year for experiences, but of course with a pandemic and social distancing, we had to put the product on pause. But I think you know next year, when it is safe to do so we can only sit at home and watch so many shows on Netflix eventually we're going to want to get outside and do some activities. And one of the things our guests tell us is they love experiences, at least from a customer satisfaction standpoint, even more than homes. So, 82% of our guests will leave a review in a home, leave a five-star review, but experiences, it’s more than 90%. So, this is something we are very focused on and I think it's just a matter of timing.
JIM CRAMER: Oh, Brian, it's Jim. First, congratulations.
CHESKY: Thank you. Thank you.
CRAMER: Amazing, amazing run. You know in the days when it got ugly, it was a you and me believing in you. Let me ask you something. How did we miss it? How did we miss that people wouldn't want to go into an elevator in a hotel and afraid to push a button or be in a little crowd and didn't want to be talking to someone when they check in, how did we not figure that you know what, a thing of Clorox you have your own house, you clean it up, that it was safe. That's the thing that just drove me crazy that people didn’t immediately get well, I got a place, I can go Airbnb, that's clean that I won't get sick at.
CHESKY: Well, I think Jim, it's a really good point. A lot of times we try to look at what happened in the history to project the future. For example, a lot of people were expecting hotels to reopen sooner, and the reason why was after 911 in 2008, business travel recovered before leisure travel. But, of course, in the world of Zoom, the future does not look at all like the past, and of course in a pandemic people didn't want to be in crowded lobbies obviously they wanted the privacy of a home and I think people want to be with the people they can connect and love with. And obviously, a home is a really good way to do that. So, you know, I think, I think that kind of worked out for a lot of people and I think that explains some of our rebound in Q3.
CRAMER: What you had to do was very tough. I know that you took it to heart and of course, you're human but it really crushed you, 25% employees laid off. Can you bring those people back? Did you bring them back? And did people get stock in this what's going to end up being a great deal?
CHESKY: Yeah, I mean, one of the things we did is, everyone that was laid off was invited to opt into an alumni directory. Basically, we said we will publish your information if you opt in and we'll let recruiters reach out to you. We did that and more than half a million people visited their profiles. So, a number of them got jobs, some of them have been hired back, but as this business continues to recover, we would love to continue to welcome more employees back and yes, anyone that had stock without obviously able to keep whatever stock would have been invested at that point.
BOSA: Brian, something that caught my eye and a number of folks in your IPO perspective is that Airbnb gets about 90% of its traffic organically through direct or unpaid channels. I wonder what kind of opportunity does that open up for you in the future in terms of your ambitions, even moonshots? Is there something in payments, advertising, perhaps your own cryptocurrency?
CHESKY: Well, I mean, Deirdre, you know, yes it's very important that the reason around 90% of our traffic was direct because we have a brand that's kind of used as a noun or verb around the world and that's because people are really passionate about the product we offer that's unique, you can't get anywhere else, obviously, and so that means when people come direct to Airbnb, again we can be much more in the business of inspiration. People come to Airbnb to figure out where they want to travel to, they can and so this is a really, really big opportunity, and we've really custom built this platform specifically for the Airbnb way of traveling. It's a whole new category. And so, I think we've done a lot of the heavy lifting to get here so yes Deirdre, I think there's a lot of opportunity for us to go in a number of different directions.
BOSA: What specifically are you looking at something in advertising as you say you sort of created this ecosystem, how do you now keep people within or bring more businesses into the ecosystem to take greater advantage of that?
CHESKY: Well I mean there's a couple things that we're looking at, number one, we provide tools and services to allow anyone to be a host and you know now, you can be a host for five minutes from your phone, and we want to continue to develop and unlock new tools and services to bring millions of more people on the platform to be hosts. But on the guest side, we think there's a lot of opportunities as well. For example, something a lot of people don't know, last year 14% of our business where stays longer than 28 days, that's now growing more than 50%. And so, what's happening is traveling and living are starting to blur together in this world of flexibility. People aren't just going to the same 20 cities, they're not just traveling for business for two nights, they're actually starting to live all over the world and they're doing it on Airbnb and that opens the door to so many different possibilities, services, and offerings that we can now do because people really want to feel grounded where they're living.
BOSA: Hmm, that's a, that's a fascinating stat that those stays are getting longer perhaps there's opportunity in property management. I want to switch topics a little bit and ask you about China which has been a bit of a hot button issue. Is there any point at which you would decide that being in China operating in China is not worth it, say for example the government wanted to do more with the host information that you have to supply to them.
CHESKY: Well, I mean, we made a decision a number of years ago that it that we were going to have standards of privacy in China that were consistent with what hotel companies like Marriott and Hilton do. So, if you go to a Hilton in China or a Marriott, they have a certain standard of information they share and we said we will comply with that level of standard because the American consumer seems to be comfortable with that, and that is a threshold that we're comfortable with. I don't really want to get into a hypothetical on what if but you know we are really proud of the business we have there, but of course that's just one of 220 countries and regions that we're in. We are one of the most global internet companies and so, you know, we are, we operate in nearly every country and region every, every place is a little bit different.
BOSA: At the same time, Brian, other tech companies have had to make these really tough decisions if the requirements become too honors. Are you ready to make those kinds of tough decisions and perhaps sacrifices in the future?
CHESKY: I think I've shown, and we've shown that we are prepared to make tough decisions when we need to. We are prepared. And if you look at the last eight months, every step of the way we've tried to do our very best to take care of our stakeholders, our guests, our hosts, our communities, and always decide not just make a business decision, but do a principled decision, even when you're not sure what the outcome’s gonna look like. And I think if you do that kind of stuff and you act in that way, I think the business eventually turns itself around.
BOSA: Let's talk about some of those stakeholders and regulations which I know that we have spent a lot of time talking about over the past few years, Airbnb has certainly had some wins, there's some work to do, particularly I know you guys have done a lot surrounding those party homes in particular but more broadly, in light of the heightened scrutiny we are seeing as big tech Facebook being the latest example just yesterday, are you preparing for regulatory pressures to increase not just at the municipal level which you guys have typically dealt with, but at the state and federal level as well?
CHESKY: I mean, we are always prepared and, you know, it's, you know, most, most internet companies, they got regulation and they got scrutiny because they were big. We actually got scrutiny while we were still operating in a three-bedroom apartment, because, you know, Airbnb exists in people's neighborhoods. And you know, I learned some difficult lessons. I learned that well when you have a challenge you should talk to them, and you should meet people face to face, and you should partner with cities. And, you know, I wish we had been faster and more proactive, but I will tell you that I'm proud that we've now collected and remitted billions of dollars of hotel occupancy tax, we're one of the largest collector emitters of hotel occupancy tax in the world, we forge relationships with hundreds of cities. I think that in some ways COVID has offered a little bit of a reset because I think that cities certainly need economic assistance and I think Airbnb could be a solution to some of the challenges but our, our principles to be transparent, to be good partners and we know that, you know, you know we're afforded the right to exist and we appreciate that.
BOSA: Right. And lastly, Brian, when we spoke over the summer, you said that travel as we know it isn't coming back. I wonder how you see it recovering now especially in terms of home-sharing versus hotel. Do you think that beyond the pandemic people are still gonna want to get in their cars and travel to home rentals instead of going to hotels and having everything taken care of for them?
CHESKY: You know, travel is going to be back. And I think that if this, if our IPO represents anything, I think it represents that our hosts are coming back and that travel’s coming back. But to be very clear, travel is never going to look like it did in January because the world is never going to look like it did in January. And I think what it's going to mean is that travel is going to get redistributed to thousands of cities and I think people are going to stay longer and they're going to be looking for more intimate authentic experiences and anyone that provides that I think it's going to be a part of this bright future for travel.
BOSA: Well, Brian, I know that you have, and your team have pioneered a new way of travel. We look forward to seeing what you do in the years ahead now as a public company. Congratulations to you and the whole team and we look forward I personally look forward to covering you guys as a public company now going forward. Good luck.
CHESKY: Well, thank you very much and thank you, Jim.