Airbnb Survived Covid, but the Crisis Mode in Sharing Economy Stays - CNBC

Excerpt from CNBC

As the company faces new challenges and recurring political battles, CEO and co-founder Brian Chesky says 2022 is 'back to our roots, back to the basics.'

To get through the crisis, the company laid off about 25% of its workforce — about 1,900 of its 7,500 employees — and raised $2 billion in a combination of equity and debt to shore up its balance sheet. The equity portion of the deal valued Airbnb at $18 billion, nearly half of what the company was worth in 2017. At the time, Airbnb also decided to "pause" activities that did not directly support the core of its host community, such as transportation and Airbnb Studios, and scaled back its investments in hotels and luxury properties. 

But as Sequoia Capital partner Roelof Botha told CNBC's Deirdre Bosa just months before the IPO — after a company that once topped the Disruptor 50 list had just fallen to No. 41 due in large-part to the pandemic — "like all businesses that involve human interaction, the sharing economy took a huge hit when Covid emerged and shelter-in-place was enforced ... but people are itching to get out of their homes."

His thesis was validated when Airbnb shares ended up 112% on its first day of trading, blowing past the market caps of giant travel industry incumbents like Booking Holdings, Expedia, and hotel chains like Marriott and Hilton.

In 2022, it has been a different story, with Airbnb shares negative on the year, but the stock has held up better than other growth-oriented companies and the overall tech-heavy Nasdaq Composite, which is down about 12% year to date.

"When we started Airbnb, it was about belonging and connection. This crisis has sharpened our focus to get back to our roots, back to the basics, back to what is truly special about Airbnb — everyday people who host their homes and offer experiences," said co-founder and CEO Brian Chesky in a letter to his employees on May 5.

Airbnb implemented measures to keep its guests and hosts happy, but the result was a wave of criticism for seemingly every step it took. Airbnb has also teamed up with rival Vrbo, owned by Expedia, to combat the issues.

Problems are recurring for other notable Disruptor 50 companies in the gig economy such as Uber, which has also struggled with user satisfaction, as well as supply and demand imbalances amid the pandemic.

Just weeks ago Chesky, who is now on a nationwide tour of Airbnb stays in an effort to "improve the experience" for customers, told CNBC that a post-pandemic future of decentralized living will be a boon to the company. Chesky famously lived exclusively in Airbnb rentals for a few months in 2010 when the company's earliest employees were crowding out what little bedroom space was left in his San Francisco apartment.

Twelve years later, it's an indication that Chesky believes his company's next act will largely depend on the same level of devotion to its customers that was required early on, in order to win using a gig economy business model that many investors remain skeptical on.

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