Airbnb's chief strategy officer reveals how the company sets goals that keep it resilient and help it escape the tech backlash
Airbnb's chief strategy officer Nathan Blecharczyk said the company had a new strategy around setting goals. The company identified two to three principles for each of its five stakeholder groups, and created one to three metrics for measuring progress against those principles, he said. The new goal-setting strategy is meant to encourage employees to make decisions with stakeholders in mind. "You have to do well by all the folks in the ecosystem," Blecharczyk said. Visit Business Insider's homepage for more stories.
Airbnb's chief strategy officer Nathan Blecharczyk remembers the days when tech was still seen as a force for good. It was a decade ago, and Airbnb had become newly "ramen-profitable," after nearly going out of business. In the years since Blecharczyk and his two cofounders grew the homestay app into a $31 billion company, and tech has been barraged by controversy on issues ranging from climate change to data privacy. The fallout could have consequences for companies hiring the next generation of engineers, designers, and product managers. College students aren't as interested in applying for Big Tech jobs as they once were, according to a trend detailed in a recent article in The New York Times. In a fireside chat with professor Arun Sundararajan at New York University Stern School of Business on Tuesday night, Blecharczyk said Airbnb has started to change the way it sets goals to factor in its effect on the world. The strategy could help it avoid the backlash whipping other businesses in tech. "A lot of entrepreneurs aspire to do good things, but as you become a bigger company and you have thousands of employees, each with their own goals, it's very easy to become narrow in your thinking," Blecharczyk said at the event. You can watch a video of the chat here. Here's how Airbnb's leadership sets goals for the company In the past, the company set an agenda for the year that answered the question, "50 years from now, what do we want to be remembered for?" Blecharczyk said. The problem was that its goals, such as creating millions of entrepreneurs or billions of friendships, were vague and difficult to measure, he explained. Blecharczyk said: "What we've said recently is that in our world, we think there are five stakeholders. There are guests, there are hosts, there are employees, there are the communities in which we operate, and there are shareholders. And we feel a duty to serve the interests of all five. We don't exist as a corporation just to serve the interests of the shareholders. "That's a nice idea. But what does that really mean? We identified two to three principles for things like, we feel accountable for the safety of our guests. We want to promote diversity in our workforce. But we didn't stop there. For each of those principles, we've come up with one to three metrics to quantify our progress. So that, very objectively, we can understand each year if we're getting better or not." At Airbnb, each team has at least one goal around creating value for a stakeholder. Blecharczyk said the strategy is meant to inspire employees to consider the ramifications of their decisions on the company's goals, as well as their own. "Our long-term success is completely dependent on the success of all of our stakeholders," he added. "You have to do well by all the folks in the ecosystem."SEE ALSO: VMware exec says the tech backlash facing companies like Google and Facebook is actually an opportunity for industry leaders SEE ALSO: How 3 guys turned renting air mattresses in their apartment into a $31 billion company, Airbnb Join the conversation about this story » NOW WATCH: Inside a $12,000-a-night Airbnb in Hollywood
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Big layoffs from Uber and Airbnb, as the lockdown has a very obvious effect on their...Big layoffs from Uber and Airbnb, as the lockdown has a very obvious effect on their businesses. 25% of staff at Airbnb. The lockdown is accelerating change that was already happening in some industries (such as mass-market retail) but also cutting across all companies in some industries regardless of how well-fitted each one was for digital.
A memo from Airbnb's CEO announcing huge staff cuts is a case study in how leaders can conduct layoffs in a compassionate way
Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian...Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian Chesky's memo to the company shows respect and compassion for all employees affected. It's a model for how leaders should conduct layoffs. The memo explains how management decided which positions to cut, what will happen to remaining employees, and the level of job support that departing employees will receive. Click here for more BI Prime stories. On Tuesday, Airbnb CEO Brian Chesky announced to employees that the company is laying off 1,900 employees. That's about 25% of its staff. In the last few months, Business Insider's Troy Wolverton reported, the company has laid off most of its contractors, postponed its summer internships, and slowed its hiring process. Layoffs are not a great experience for anyone, and especially not for the people losing their jobs. But Chesky's memo to employees is a prime example of how to do layoffs right, in a way that's respectful, compassionate, and pragmatic. It's rare to find such an example these days. As Business Insider previously reported, startups including the scooter-maker Bird, the employment marketplace ZipRecruiter, and the women's coworking space The Wing have recently conducted layoffs via massive Zoom calls. Some employees at these companies said they were caught off guard and confused about what was happening. Chesky, perhaps taking a hint from widespread indignation at the idea of layoffs via videoconference, did things differently. His memo to employees followed, almost to a tee, the advice that HR experts have previously shared with Business Insider around conducting layoffs. You can read the full text of the memo here. Here's exactly what Chesky's memo did right. It outlined the decision process for cutting positions In the memo, Chesky was transparent about Airbnb's financial decline. "Airbnb's business has been hit hard," he wrote, "with revenue this year forecasted to be less than half of what we earned in 2019." (The company's 2019 revenue was $4.8 billion, Wolverton reported.) To help alleviate some of the financial burden, Chesky said Airbnb is "reducing the size of our workforce around a more focused business strategy," specifically the business of helping people rent out their homes and find homes to rent. The company is "pausing" its investments in areas like transportation and hotels, Chesky added. That means staff who worked in those areas will likely be let go. Chesky listed as one of his "guiding principles" in conducting the layoffs the desire to "map all reductions to our future business strategy and the capabilities we will need." Elaine Varelas, managing partner at career-management firm Keystone Partners, previously told me that executives doing layoffs should let the business' strategic direction and financial situation guide them. "The positions are what's eliminated," she said, and not the people. It made a justifiable argument for why certain employees will be let go Chesky went one step further, outlining how management reviewed each employee's skill set and considered "how well those skills matched our future business needs." Some employees whose teams were not eliminated will be asked to assume new roles, Chesky wrote. Again, Chesky made it clear that these layoffs are about positions and skills, which are more easily quantifiable and justifiable than how much the CEO likes someone. As Buffer CEO Joel Gascoigne (who conducted layoffs a few years ago) previously told me, it's important to identify how and why positions will be eliminated. Otherwise, executives are vulnerable to subjectivity seeping in — and to employees accusing them of making biased decisions. To that end, Chesky also listed as one of his guiding principles the desire to "be unwavering in our commitment to diversity." It explained why information about staff cuts was kept confidential until now Chesky noted in the memo that management opted to "wait to communicate any decisions until all details are landed" because "transparency of only partial information can make matters worse." This decision to keep news of the impending layoffs private was wise. Varelas told me that a common mistake she sees is not keeping information about layoffs confidential until you're ready to make the announcement. That can lead to rumors — and terror — spreading throughout the staff. It prepared affected employees for one-on-one meetings with their supervisors In contrast to the startup execs that conducted layoffs via a mass Zoom call, Chesky wrote in the memo that the employees who were getting laid off would have one-on-one meetings with a senior leader in their department. Yair Riemer, president of career transition services at CareerArc, previously told me that a one-and-done videoconference isn't the right way to announce layoffs, as efficient as it may seem. Similarly, Varelas said leaders should have one-on-one meetings with everyone who's let go, giving those employees time to process the news and ask questions. It addressed the employees who will be staying on, too Chesky dedicated a few lines of the memo to the Airbnb employees whose positions were not cut: "One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb's story." He also wrote that some employees would receive emails about their new roles at the organization, in line with the restructuring, as well as invitations to discuss their new role with a manager. Riemer said it's important to explain to remaining employees how the layoffs are going to affect the organization. The result? "You end up losing that talent anyway," Riemer said. "They're going to start thinking about moving to competitors. They're going to start getting poached. They're going to start losing faith and confidence in your leadership." It treated departing employees with respect and compassion The most important piece of Chesky's memo is that it acknowledged what a disruptive life event layoffs can be. Employees may not know where their next paycheck is coming from, or whether they can afford their next visit to a doctor. In the current economic environment, they may not be certain they can find another job. Varelas previously told me that respect for employees is key. No one should be "treated suddenly like they're a criminal," she said, or even like someone who hasn't worked hard to help the company grow. Chesky outlined what will happen to employees' benefits after they leave. Specifically, employees in the US will receive at least 14 weeks of severance pay, with additional severance pay available depending on employees' tenure at the company. Employees in the US will also receive 12 months of health insurance coverage beyond their departure date. (In all other countries, health insurance extends until the end of 2020.) Most notably, Chesky wrote that Airbnb has dropped the one-year cliff on equity for everyone the company has hired in the past year. That means they don't have to wait one year, as they typically would, for their stock options to vest. All employees have the chance to become shareholders in the company on May 25, Chesky wrote. It outlined the support employees would receive around career development Departing employees will receive relatively substantial support as they look for a new job, according to Chesky's memo. That support includes an alumni placement team, made up of some Airbnb recruiters who help find departing employees their next role at another company. Those employees also have access to a company that specializes in career transition and job placement services. And they're allowed to keep their company laptop, which Chesky said is an important tool in finding a new job. These provisions for employees are important not solely because they're the right thing to do, ethically speaking. The business case for taking care of employees after layoffs is that they're more inclined to stay loyal to the company. "This is the moment where brands are built or brands are dented," Riemer said. If the company mishandles layoffs, Riemer added, "it absolutely will impact recruitment and talent because the world is small." When former employees, say, write reviews on Glassdoor, they won't say terrible things that will dissuade prospective hires from applying if they were shown compassion. And should Airbnb ever want to hire these folks back, they'll remember how respectfully they were treated at this time. It will make a big difference.SEE ALSO: The startup founder's guide to letting people go efficiently and compassionately, if you have no other choice in a time of crisis Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
Airbnb employees chipped in $1 million from their own pockets to help economically devastated hosts, and that says something beautiful, and scary
Airbnb employees thought that 2020 would be a time of celebration for them as the short-term...Airbnb employees thought that 2020 would be a time of celebration for them as the short-term rental startup was expected to go public in one of the most anticipated IPOs of the year. Instead they found themselves digging into their own pockets to donate to their customers to keep just a small portion of them afloat. Employees contributed $1 million collectively to a $17 million fund that will offer up to $5,000 to badly hurt hosts. (Airbnb founders kicked in $9 million and investors kicked in $7 million). It's a beautiful gesture that points to a bigger problem. The small businesses owners that are the backbone of the sharing economy are shouldering more than their fair share of business risk. But there are some hopeful signs of how this could change, and the sharing economy could truly become a win-win. Visit Business Insider's homepage for more stories. As the COVID-19 crisis brought travel to a screeching halt, the people that rent rooms, condos and all sorts of other abodes on Airbnb suddenly found themselves with little to no income. What's more, Airbnb instituted cancellation policies that allowed guests to get full refunds, a policy that made sense given the situation but which left many hosts with the short end of the stick. GoFundMe campaigns have sprung up across the nation to help small businesses like bookstores and restaurants survive until the virus recedes and people begin to roam about again. And in that vein, Airbnb employees created the Airbnb Superhost Relief Fund, a program intended to help at least some of its highest-rated hosts, known as "superhosts" to survive. The fund is limited to superhosts who can prove Airbnb is their main source of income, have been on the platform for at least a year and have two or less properties (a nod to regulatory pressure to limit hosts building big hotel-like businesses on Airbnb, with multiple listings). The fund is invitation-only; Airbnb chooses who can apply. Superhosts will get up to $5,000 apiece as a grant, not a loan, although they'll be responsible for their own taxes. Airbnb's weathly founders put $9 million into this fund. Company investors put in $7 million. And Airbnb's employees contributed $1 million from their own pockets, the company says. Airbnb has its share of highly paid engineers, but it also has an army of of hourly workers. "While I can't be certain I will receive an invite to apply, I cried tears of gratitude for the @Airbnb superhost grant fund. Losing my sole source of income overnight was tough," one host posted on Twitter. The employees' $1 million-worth of contribution to the fund is especially noteworthy given that Airbnb employees thought 2020 would be a jubilee year for them, as the company was expected to go public in one of the biggest IPOs of the year. That IPO is now on ice, and their employer is scrambling until the travel industry comes back. Airbnb has had to obtain $2 billion in two new financing deals this month. Such generosity by people who are facing their own uncertain future is beautiful. But it also shows a scary side of our the so-called sharing economy. It's not really sharing. You take the risk, I take the money The so-called independent workers running their own businesses are beholden to the tech company that owns the platform. The tech company assumes very little of the business's risk. In Airbnb's case, it doesn't hold the mortgages or clean the rooms or pay the utilities or the taxes. In Uber's case, it doesn't make the car payments or pay for the maintenance. For Amazon's third party sellers, the retail giant doesn't pay for the products. These platforms are built on the backs of these small business owners who don't share the power. If the platform changes a policy (which they have been known to do), they can devastate the people who risk it all to provide the platform with the products it sells. Because Airbnb has been so lucrative, some people have leveraged themselves to the hilt with many mortgages, an unwise risk in hindsight. Those people won't be helped by the Superhost Relief Fund, as one angry host points out in a tweet. "@Airbnb I don't understand [the] superhost relief fund NOT including the hosts who have dedicated everything to being AirBNB hosts (those w MANY listings). We are the ones whose sole income is #airBNB and we are the ones with HUGE mortgage costs sitting on our necks during #COVID2019" Airbnb says these hosts may have qualified for small business loans under the emergency funding CARES Act, but the $349 billion federal relief program for US small businesses ran dry on Thursday, the SBA said. If there were no Airbnb, those landlords would likely have been renting their rooms and apartments to long-term tenants. Airbnb properties are now flooding onto the rental market, which could lead to falling rents and, some say, will exacerbate an impending real estate collapse. Power to the suppliers Obviously, no one wants to go back to a world where there are no tech platforms and no opportunities to build a global small-businesses accessible with the tap of the smartphone. The platforms provide the software, hire the engineers and pay the bills for the big cloud services that link everyone together. But we may not want to go back to a world where the economic risk is not shared more equally by everyone. Whatever happens to the Airbnb property owners or the Uber drivers or other gig workers, the founders of these platforms are already billionaires and the well-paid engineers will likely land on their feet at other jobs. There may be two outcomes after COVID-19. We may see the rise of some form of a union for platform suppliers where suppliers can band together and, in essence, collectively bargain. The platform will be forced to consult with the suppliers before it tinkers with policies that could badly hurt them. We've already heard whisperings of tenant associations forming in some parts of the real estate world. Another intriguing potential outcome of the current crisis is the emergence of a new type of tech platform in which gig workers — that is, the "suppliers" in a platform business model — have greater control of their individual business. For instance, a startup called Dumpling is doing this for grocery delivery workers. It offers software that lets personal shoppers build a grocery shopping client base, independent of, say, an Instacart. Dumpling was named by VCs as one of the startups that will thrive in the post coronavirus world. Supply-side platforms like this would allow sharing economy workers to use the broader platforms — whether for grocery delivery, transportation or home rentals — while also building their own, truly independent businesses. Are you an Airbnb employee or insider with insight to share? Contact Julie Bort via email at firstname.lastname@example.org or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188. Now read: Airbnb hosts will be charged fees if they cancel summer bookings due to coronavirus concerns Tech CEOs say they plan to scale back on real estate for offices now that they know everyone can work from home, and it's not good news for WeWork 18 startups that VCs say will thrive this year despite the economic crisis SEE ALSO: Airbnb hosts will be charged fees if they cancel summer bookings due to coronavirus concerns Join the conversation about this story » NOW WATCH: We tested a machine that brews beer at the push of a button