In Airbnb's battle of Silicon Valley versus Wall Street, it appears that Silicon Valley has won this fight — for now.
Airbnb chief financial officer Laurence Tosi, who had long been rumored to be eyeing a position as the company’s chief operating officer, is leaving Airbnb almost three years after joining it. Instead, the company has named Airbnb chief business affairs and legal officer Belinda Johnson as its chief operating officer, the company’s first.
Airbnb said Tosi is leaving the company to devote his time to Weston Capital Partners, his own investment fund, and will continue to serve on several external boards. Airbnb has hired a search firm, Crist Kolder Associates, to assist in the search for a new CFO. Ellie Mertz, Airbnb’s head of global financial planning and analysis, will serve as interim head of finance. No replacement for Johnson in her current role has been announced.
In a statement, Airbnb CEO Brian Chesky wrote: “The COO is one of the most critical positions in any company. Before the holidays, I made a decision about who was right for this role and I’m incredibly excited to announce that we have appointed Belinda Johnson to be our COO.”
As Airbnb pursues an initial public offering — which Chesky emphasized would not be happening in 2018 — the company’s need for a COO, a new position at the company, has become increasingly apparent, and the timing of this announcement is an interesting one, to say the least.
“I know people will ask what these changes mean for a potential IPO,” Chesky said. “Let me address this directly. We are not going public in 2018. Our primary focus is becoming a 21st century company and advancing our mission. We’re working on getting ready to go public and we will make decisions about going public on our own timetable.”
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This change in the company’s executive leadership comes almost one week after Chesky penned an open letter outlining his plans for turning Airbnb into a “21st-century company.” It followed a published report that Chesky and Tosi were at odds about the direction of the company, which has a current valuation of $31 billion.
On January 23, The Information published an article about the “tensions” between the two Airbnb executives, noting that Tosi, the former Blackstone CFO and seasoned Wall Street executive, clashed with Chesky over their visions for Airbnb’s potential foray into flights, as well as Trips, its tours and activities business that was launched in September 2016. The Information also noted that Tosi, who had been with Airbnb since July 2015, was hoping to be named the company’s COO, or head of its Homes division.
The article depicted a classic battle between the hard-nosed numbers guy, Tosi, and the visionary dreamer, Chesky. While Tosi wanted Airbnb to follow a more traditional route in establishing its flights business, Chesky had grander schemes of perhaps even starting his own airline. Tosi preferred to grow Airbnb through mergers and acquisitions, while Chesky wanted to grow it organically, using technology as a source of innovation.
Another point of contention between the two centered around the fact that Tosi wanted the company to focus on growing its core business, Homes. Chesky, however, has publicly said he anticipates that by the year 2020, at least half of Airbnb’s revenues would be generated from businesses it does not currently operate in. The chart below details Airbnb’s forecasted revenues.
Bloomberg reported that Tosi was informed of Johnson’s promotion this Monday, January 29.
The tensions between Tosi and Chesky could serve, in some ways, as a reflection of what today’s tech unicorns are facing: balancing the founder’s visions with the need to professionalize and mature the business in preparation for an IPO. Or more succinctly, it could be presented as a battle between Silicon Valley’s way of doing business and that of Wall Street.
Tosi, for his part, has played a crucial role in Airbnb’s profitability. The company said it achieved $100 million in profits last year. With that profitability, however, the company also endured a number of cost-cutting measures, including job losses in its customer service and employee food services departments.
Chesky said of Tosi: “Finally, I want to thank LT for his tireless work on behalf of Airbnb and our community. He helped Airbnb establish a rigorous financial discipline, aided our expansion into new businesses including into luxury rentals, which is now one of our core businesses, and helped us develop new and innovative ways to grow Airbnb and our businesses. Today, the company is one of the world’s fastest growing at our scale and is profitable, as measured by EBITDA, and cash flow positive with a $5.5B balance sheet and we continue to see material growth momentum in markets around the world. I want to personally thank LT for his leadership, creativity and lasting contributions to Airbnb.”
In the same press statement issued by Airbnb, Tosi wrote: “The two-and-half years I’ve spent at Airbnb have been some of the most thrilling of my career. We achieved much of what I set out to accomplish when I joined. Working together with my colleagues, we have achieved incredible success: Today, Airbnb is profitable, and continues to have tremendous growth opportunities in markets around the world.
“Our CX [customer experience] platform now reaches record levels of community members at the highest satisfaction levels in our history and some of the best in the industry. In payments, we continued to be the market leader in innovating new features and global processing scale. While the time is right for me to build my own business, I will miss working with the top tier teams we have assembled and am confident that they will continue to create value for Airbnb and our community.”
The New COO
Belinda Johnson joined Airbnb as its general counsel in 2011, and in 2015, around the same time that Airbnb announced Tosi was joining the company, she was promoted to the role of chief of business affairs and legal officer. Prior to joining Airbnb, she was deputy general counsel at Yahoo and served as general counsel and corporate secretary at Broadcast.com. Last year, Johnson was named to the board of PayPal Holdings.
In her work at Airbnb, Johnson has often led the company through various legal battles, and helped lay the groundwork for the company’s relationships with local governments and municipalities.
Chesky’s decision to appoint Johnson as COO may come as a surprise to some, but not to those who are familiar with the company. And to some, her appointment may mirror Facebook founder Mark Zuckerberg’s decision to bring on Sheryl Sandberg on as his COO prior to taking his company public.
A source familiar with both executives and the company said Johnson is known for her excellence in building and scaling teams — something the company will have to do as it pursues that eventual IPO.
That same source also confirmed that the company has, as Skift previously reported, reorganized itself into four business units in the past few month: Homes, Trips, Lux, and China. With that reorganization, the need for a COO was necessary to oversee those businesses, and Johnson, who had experience as chief of business affairs, was the appropriate person to fill the role.
“We have these four businesses now, and how we figure out how to build and scale and continue to achieve hyper growth is something she’s good at,” the source said. “They have a good relationship with one another, they approach problems in a different way, and they work together really well.”
Of Johnson, Chesky wrote: “We’re a better company because of Belinda’s leadership. As our COO, Belinda will be responsible for the systems and teams that enable our businesses to function, as well as our legal, policy and communications teams. Belinda will also be a partner to me. Belinda and I often approach things differently, and this is one of the reasons we’ve worked so well together over the years. I learn from her every day, and I’m a better leader because she is my partner.”
Johnson received the endorsements of the Airbnb board of directors, including board observer and LinkedIn founder Reid Hoffman.
What This Means for the Future of Airbnb
The difference in philosophies that Tosi and Chesky had for growing Airbnb is something other tech darlings have faced in recent years, and in this case, it appears that the founder, or the Silicon Valley approach, has won out.
While startup founders whose companies are on the road to an IPO have often been asked to take a back seat to a “professional” CEO who could prepare the company to go public, today’s tech startup founders are often sticking around — and hoping to ensure their visions remain intact.
Uber’s Travis Kalanick, for one, was an example of that before he was unceremoniously asked to step down. Facebook founder Mark Zuckerberg’s experience with taking his company public, however, may serve as a better primer for what we can expect with Airbnb’s pursuit of an IPO.
It’s clear that with Johnson’s appointment and Tosi’s departure, Airbnb is a company that is holding steadfast to its founder’s vision: for Airbnb to become what other former Airbnb executives — former global head of hospitality and strategy Chip Conley and former chief marketing officer Jonathan Mildenhall among them — have described as a “super brand of travel.”
Exactly how Airbnb gets to that point, or fulfills that vision of Chesky’s, will certainly be an interesting journey to watch.
Photo credit: Airbnb announced it has promoted Belinda Johnson (left) to chief operating officer and that chief financial officer Laurence Tosi is leaving the company. Airbnb