Airbnb has legions of critics, and it knows that its articulated stakeholder goals will get intense scrutiny. But if the company turns some of these corporate governance aspirations into reality, then it could emerge looking pretty good compared with many established travel industry companies offering just lip service.
In the run-up to the World Economic Forum next week in Davos, Switzerland, where stakeholder capitalism will be a central theme, Airbnb released an update on its goal “to be among the first of the true 21st-century companies.”
Consider the update, despite the lofty rhetoric, another step toward Airbnb’s not-inconsequential other goal — becoming a public company this year.
Among the news in the update, Airbnb will establish a formal stakeholder committee on its board of directors, it detailed metrics that will be tied to employee bonuses, and announced it plans to grant $100 million over the next 10 years to local communities.
Here are six takeaways from the Airbnb stakeholder update, which might be considered its stake in the ground and aspirations as a practitioner of stakeholder capitalism:
1. Disclosures About Metrics
There are some interesting disclosures in the update about metrics that Airbnb aims to achieve. Airbnb disclosed that as of this month, 70 percent of stays globally involved both verified guests and hosts. Airbnb’s pledges to get this number to 100 percent by December 15.
One statistic Airbnb released that is potential misleading is that from October 1, 2018 to September 30, 2019, 99.97 percent of its trips had no Host Guarantee claim of more than $500; the company said that there were no reported personal safety incidents in 99.4 percent of trips.
It would be interesting to know, however, what percentage of trips involved a host guarantee safety claim of less than $500. That would skew the percentage a bit. Undoubtedly some damage incidents go unclaimed, as well.
On the diversity front, Airbnb disclosed that in 2018, 48.9 percent of all Airbnb employees globally were women. In the U.S., Airbnb said, 12.3 percent of employees “were underrepresented minorities.”
What about Airbnb executives? The diversity numbers on executives globally would be a welcome disclosure as far as measuring progress in this important arena.
2. Little Meat on the Bone Regarding Local Communities
While Airbnb said one of its core principles is to strengthen the communities it serves, it offered no metrics to measure that impact. Airbnb does vow to measure the carbon footprint of both its corporate operations and trips, encourage travel to disparate destinations, and establish higher standards for sustainable travel, but the company doesn’t detail how these elements will be measured.
For example, beyond the carbon footprint issue would Airbnb tally its impact on housing prices in communities where speculators are buying up apartments to turn them into Airbnb-type lodging?
Will Airbnb publicize statistics on its compliance or non-compliance with local laws?
All of this remains to be seen in future updates.
3. A Design Worldview
It’s well-documented that Airbnb co-founders Brian Chesky and Joe Gebbia attended the Rhode Island School of Design before launching Airbnb in 2008, so it’s interesting that the update repeatedly frames its work to identify serving stakeholders as a “design challenge.”
“The design challenge is to create a company that considers the needs of all stakeholders,” the update says. “Hosts provide Guests with unique, authentic experiences so they feel like they belong, and Communities are where our business takes place. Unique and authentic, community-based experiences inspire people to want to travel. Finally, our Employees and Shareholders help power this work and grow this incredible community.”
Of course, one of the key imperatives of these design challenges, will be to make shareholders happy. The company vows to “make long-term strategic decisions” in the interests of shareholders, and will use financial metrics on revenue; profits; gross booking value; and nights and seats booked.”
When it comes to a design challenges, of course, balancing shareholder interests with those of employees — some of whom are shareholders — and communities, is a key conundrum in stakeholder capitalism. Airbnb doesn’t use the term stakeholder capitalism in its update, but it is clearly a framework for Airbnb’s principles.
4. Airbnb Found Roles for ‘Joebot’ and Belinda Johnson
Belinda Johnson, who is on her way out as Airbnb’s chief operating officer, with some viewing her as a casualty of Airbnb’s goal of trading on the stock market, will chair the Airbnb board’s newly created stakeholder committee.
The stakeholder committee will take up that “design challenge.” “This Committee will be responsible for advising our Board regarding our multi-stakeholder approach and the impact of our company on our stakeholders, the steps to institutionalize this approach into our company’s governance, and the application of our corporate governance principles to shape the future of our company,” the update says.
Another employee undertaking a transition prior to Airbnb getting a stock market symbol, namely Joe “Joebot” Zadeh, will lead “a dedicated team inside Airbnb” to choreograph how the company will serve competing stakeholder interests. Airbnb said in October that Zadeh will be moved out of his role heading Airbnb Experiences, which he helmed since its creation in 2016.
Airbnb Experiences could be a key plank — or big headache — in Airbnb’s effort to go public. Understandably, it was a big money-loser in its early days, and if that is turned around it could be a substantial part of Airbnb’s narrative that it can develop big revenue streams beyond apartments, homes, and hotels.
5. Employee Bonuses Will Be Tied to Guest Safety
One of Airbnb’s big challenges is convincing potential and actual guests, including solo women travelers, for instance, that it is as safe to stay in an Airbnb as it is to book a hotel.
In that regard, Airbnb announced that a component of determining employee bonuses will be “progress on our stakeholder principles,” including guest safety.
Tying employee compensation to guest safety is a smart move.
6. Opening Up the Checkbook to Communities Is Not Enough
Airbnb plans to award $100 million in grants to local communities over the next 10 years. That’s laudable, but for a company the size of Airbnb, it’s not enough, as Airbnb concedes. Some of these grants in the past, such as working with the U.S. NAACP to get more people of color to sign up as hosts, have been in Airbnb’s self-interest.
Beyond grants, Airbnb’s impact on local communities in terms of issues such as affordable housing, overtourism and quality of life, need to become much higher priorities.
Airbnb’s senior executives will not be attending the World Economic Forum in Davos next week, but clearly the release of these updated stakeholder goals is meant to capture the outsized spotlight placed on the gathering of world leaders every winter.
Photo credit: Airbnb won't be at the World Economic Forum in Davos this year, but it had a few things to same about the 2020 theme of stakeholder capitalism. Visual Hunt