Airbnb CEO Brian Chesky has traditionally played coy when it comes to specifying exactly when his company, valued at an estimated $31 billion, would eventually go public, but on Wednesday he issued a more definitive timeline for an inevitable IPO.
“We will be ready to IPO next year, but I don’t know if we will,” Chesky said, speaking on stage at Recode’s Code Conference in Rancho Palos Verdes, California.
He added that he and his company don’t feel pressured to rush to an IPO: “We have investors who are really patient and I want to make sure it’s a benefit [to them] when we do.”
The company is still searching for a new CFO, as well as a replacement for chief marketing officer Jonathan Mildenhall, who left Airbnb in October, 2017, to start his own company as well.
Numerous reports that followed speculated that Tosi’s departure stemmed from his disagreements with Chesky on what the company needed to do to go public, including differences of opinion when it came to growing the company’s core homes business and pursuing flights, experiences, and complementary services.
Chesky attributed Tosi’s exit from Airbnb to Tosi’s desire to “start his own company.” While Chesky admitted he and Tosi “had different visions,” he said reports that the two butted heads when it came to Airbnb’s possible entry into aviation were “not true.”
Instead, he said that where they had differences of opinion related to Chesky’s vision of “building this end-to-end travel app where you could be this global travel community.” And whereas many people tend to view “Airbnb as real estate,” Chesky’s definition of the company extends beyond “a series of commodities” to encompass an entire “community.”
Online Travel Competition from Booking and Others
When asked what would compel a consumer to book on Airbnb versus its competitors, such as Booking.com. Chesky again emphasized the fact that Airbnb is more of a community and that its global network effect has only intensified the bigger the company has become — as has its brand
He also noted that of the company’s now total five million listings worldwide, 3.5 million, or 70 percent, were exclusive to Airbnb.
“it’s not about who has the most homes,” Chesky said. “It’s about the most unique inventory.”
He also re-emphasized his desire to develop Airbnb into a true “ecosystem” or “one-stop shop for travel.”
“The idea is we want to take what is a platform for homes — a single platform with 100 businesses or 100 categories,” Chesky said.
Right now, he said the company has “dozens of incubations going” and while he didn’t elaborate on them, he noted the company is intently focused on building up its travel content and adding complementary services.
“I would love to put content in the app so you come to Airbnb to figure out where to travel and the content is more interesting — and not tourism.”
Airbnb’s Biggest Focuses for 2018 and Beyond
Chesky said he also wants the company to focus on the things that differentiate the company from its competitors: namely its tours and activities business, interchangeably known as Airbnb Experiences and Airbnb Trips, as well as the company’s growth in China.
Chesky said that Experiences, which officially launched in November 2016, is “doing incredibly well” and that the company has had 1.5 million Experiences bookings a year on an annualized basis with 92 to 95 percent of reviews at five stars.
Chesky’s comments countered a news report from earlier this year that said the business was not yet profitable, and that consumers weren’t buying as many Trips as Airbnb had initially hoped.
Nevertheless, in February, the company announced it would expand its Experiences business from just 60 to 1,000 destinations by the end of 2018.
And Chesky remains confident that Airbnb can succeed in a sector — tours and activities — that’s been notoriously challenging for companies to see success, either because they don’t have enough traffic or because they are selling “tourism, or stuff that if you lived in a city you would never do.” Airbnb, he implied, has the traffic and its Trips are being created “in the eyes of a local.”
The potential opportunities to be found in the “experience economy,” Chesky said, will be tremendous, even rivaling the market caps of companies like Amazon and Alibaba. “There will be a massive economy around experiences and we will be just one player in it, but it will be really big,” he noted.
As for the company’s operations in China, Chesky was careful to demonstrate how Airbnb is also different from other tech companies who have dared and often failed — to succeed doing business in that country. He said that in China, the company has approximately 200,000 home and approximately 10 million users. He also said that having co-founder Nathan Blecharczyk manage Airbnb China as its chairman “has worked really well for us.”
“Everyone told us to treat [China] like a different universe,” Chesky noted. Airbnb, has thus far, heeded that advice: forming its own business unit in China, complying with local laws regarding privacy, and even changing the company’s name to Aibiying.
But there are rumblings that not everyone is happy with the company’s strategy in China. A news report today from Bloomberg revealed the company had nearly merged with its biggest Chinese homesharing rival, Tujia, in 2017 but that, at the very last minute, Chesky decided to abandon the plan.
Many hoped that by merging with one another, the two companies could avoid engaging in a war of attrition but instead, Airbnb continues to operate in an increasingly crowded Chinese market that includes Tujia, as well as other homegrown rivals such as Xiaozhu and Meituan-Dianping.
Tech’s Responsibility to Society
Chesky also addressed the regulatory battles that the company is facing in cities such as New York City, which he identified as one of “the four most difficult cities from a regulatory standpoint.”
“It doesn’t seem like the end is in sight with that challenge,” Chesky said, referring to the company’s regulatory battles in the city, which he attributed to the “massively powerful hotel industry, and hotel unions that have crafted this kind of perpetual battle” that has resulted in a “political standstill.”
When asked why Airbnb hasn’t just decided to leave New York City altogether, Chesky said, “If it was just a business decision, it probably wouldn’t be worth it to stay there, but 50,000 people depend on it to make income there. I can’t just make a decision from a clearly business perspective. The moment you create something, and people depend on it, you have to be responsible for it.”
While it could also be argued that Airbnb is just as dependent on its business in New York City — one of its largest markets — as those 50,000 individuals whom Chesky pointed to, he took that statement as an opportunity to expound on tech’s greater responsibility to society at large.
“We want to make neighborhoods better, and not more expensive,” Chesky said. “We want to be good for neighborhoods.”
Earlier this year, the company debuted a new Office of Healthy Tourism designed to tackle overcrowding by visitors that has increasingly put a strain on local economies worldwide ().
“Us and other companies need to consider our impact on society,” Chesky later added. “Most companies are oriented on a 20th-century model that’s short term and about serving our shareholders, but I think society expects more of us.”
You can watch the full interview with Chesky below: