‘From the Navy to the Navy Seals’: Airbnb’s Brian Chesky has some advice for tech CEOs steering their companies through the current economic climate

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Zooming In

A deep-dive into one big theme or news story every week.

The tech Armageddon seems to be here, thanks to the shadow of a potential recession.?

Cost-cutting and layoffs have become the norm – rather than the exception – with big tech giants including Amazon and Meta also announcing significant streamlining moves and layoffs.

Not everyone in the economy, however, is feeling the same weight of an economic slowdown.?

As other companies retrench, Airbnb is enjoying a banner year and making more money than ever, with its profits up 46 percent in the third quarter of 2022. It also just rolled out a slew of updates aimed at getting more people to use its platform as part of its 2022 Winter Release.?

But the path to profitability wasn’t an easy one, as the San Francisco-based company’s co-founder and CEO Brian Chesky has shared before. Between being founded during the Great Recession and IPOing during the pandemic, Airbnb has seen its fair share of ups and downs.

How did the company survive 80% of its business being decimated overnight to get to where it’s at today – and what are the lessons other tech companies navigating the current climate can learn from his approach? I sat down with Brian this week to discuss the takeaways, what it means to be a design-led company, why he’s enlisting his own house on Airbnb – and more.

Watch the full interview and read an excerpt of the highlights from the conversation below.

You rolled out a bunch of new products this week, making it very easy for guests to live in an Airbnb – whether it's putting up fees upfront, or signing up to host. But on the other end of it, hosts have been complaining about there being saturation and it getting harder to compete. How do you make those product decisions? How do you prioritize which products to put in the pipeline?

We run Airbnb different(ly) than most companies. We have one roadmap. The whole company's functionally organized. We have no business units. We have a marketing team, a design team, an engineering team, and others. We're organized like a small startup. And every single thing we do is on one single roadmap. Almost all other tech companies don't have a single roadmap.

I probably can't think of one, maybe Apple. Usually they have divisional leaders. They have their own roadmaps. So we have one roadmap, and in that roadmap we all get together and we prioritize from the most important to the lowest priority. And the most important things we do are about making the experience better for guests and hosts. So we really try to listen.?

Most small companies start that way. And then they want to move faster. So when small companies want to move faster, they subdivide the company. They either have different business units or different product managers, and they empower them to be autonomous. And autonomy and empowerment seems like a good thing when you're small.?

But one day, you wake up, and you have like 10 leaders going in 10 different directions – no clear strategy. The only strategy is to grow and hit some financial metric. No customer can tell you what you've done. (Do) you ever notice, you open your phone and most apps in your phone haven't changed very much year to year?

It's not that people aren't doing a lot of work, it's that they're just not all rowing in the same direction. And so it's uncomfortable to get the employees to row in the same direction. Initially, most employees don't want to work on the same team, the same direction, because there are dependencies. It forces a lot of collaboration, and initially it feels slower.

But once they get the muscle, it will out-compete a divisionalized company in most circumstances. Not all the time, but if you can get everyone working together — and this is what Steve Jobs said at Apple — he had the company go from a divisional structure to a functional organization. He ran the company, not off metrics, but a roadmap on a calendar, and they were able to make some huge, huge impacts.

And so prioritization (at Airbnb) happens at the CEO level. I don't have strategic priorities like ‘we want to one day become X.’ Our prioritizations are at the project level. And I get at the nitty gritty of the program management and the product level details. I think that's really important.?

I'm not saying every company should run this way. I'm just saying that this is another way to run a company and it's at a CEO's disposal to consider this way of working.

(Speaking of) uncomfortable times, the tech industry – not a very comfortable place to be in right now. But you have been through rough waters when in 2020, you lost 80% of your business overnight and had to make really, really fast changes — and then still managed to IPO.

Airbnb is having a banner year now, but that's not true for the rest of the industry. Talk about that experience, what you learned from it, and how the industry can look ahead and pass through these uncomfortable times.

I would say a couple things. Your culture is often forged in your darkest moments, not in your best moments. And I think that sometimes constraints breed creativity. I think that most companies in tech raise too much money, and I think when you raise too much money, you don't have to say no.

You don't have to say no to products, you don't have to have high accountability. If somebody's not successful, you can just avoid it by keep(ing) on hiring more people. People don't have to be as hungry. They don't have to work nearly as hard, and they can lose focus. And when you have a crucible moment – like we did – where you (end up) losing 80% of business and people are questioning your survival, it's a really clarifying thing.

Suddenly, it's like the house is burning, and you can only take half the things out of the house. And then you realize, well, what are the things I want to save? And those become your priorities. And that's a really good exercise. If you can only save half your company, which half of the company would you focus on? And that's probably what people should do.?

Most companies do too many small things instead of doing just a few big things that really matter. Most companies row in too many directions. Their CEOs are afraid to tell their employees what to do. Employees don't want to be told how to do their job, but they all want to be told where the mountaintop is. They don't want to just, you know, democratize data and then use the data to figure out how you can make "impact."

I put impact in quotes, because the more employees focus on impact, the less impact they usually make, 'cause that's a proxy for people rowing in many different directions at the same time. If a bunch of us are in a car and we all have a steering wheel and we're all steering in different directions, that sounds really, really inefficient.?

I also think people should be lean. Small teams move faster than big teams usually. Obviously there's too small to get anything done. But bigger teams need more meetings, and more communication, and it often slows things down. So I think that teams should be lean.?

I think of us as having gone from like the Navy to the Navy Seals. That was the metaphor I used with the team (at the time). We're not going to have as many people, but we're going to be lean, we're going to be focused, we're going to be disciplined, we're going to be much higher skilled, we're going to have a team of experts. And I think these are some of the lessons people can learn.?

TechTok

Catch up on the tech headlines you may have missed this week and what people are saying about them, and join valuable member conversations on LinkedIn.

• Widespread layoffs hit Amazon this week, with devices, retail and human resources departments being the most affected. To read what members impacted by the layoffs are sharing on LinkedIn, click here.
• The situation is the same across the border, with a pair of Canadian startups joining the growing list of tech companies cutting back on staff. TealBook and Symend have each rolled back staffing levels to keep costs down during a broader downturn for the industry.
• A cloud of uncertainty may be hanging over the tech industry amid economic gloom, but one company is bucking the trend. While Meta, Twitter and Amazon have announced mass layoffs in the past week, Chinese social media platform TikTok is set to double staff.
• Apple’s in a similar boat. While rival tech firms announce layoffs, Apple CEO Tim Cook says the company is filling open roles — at a much slower pace than usual. "We’re being very deliberate on our hiring," he said.
• Back to regularly programmed Twitter news: Elon Musk gave remaining Twitter employees an ultimatum Wednesday: agree to work long hours at high intensity or leave. The new CEO, who has already slashed half the social media company’s staff since taking over three weeks ago, said those who opted out would receive three months severance.

Movers & Shakers

Here’s keeping tabs on key executives on the move and other big pivots in the tech industry. Please send me personnel moves within emerging tech.

• Offline Ventures has hired Ryan Davis , previously at Pantera Capital , as CFO.San Francisco-based VC firm Zetta Venture Partners , focused on AI startups, has hired Foundation Capital’s Apoorva Pandhi as managing director.

BSA | The Software Alliance has hired Matthew Lenz , previously the director of state government affairs for the Entertainment Software Association, as senior director of state advocacy.? Palo Alto Networks is acquiring Israeli startup Cider Security (acquired by Palo Alto Networks) , which focuses on application security. Index Ventures has unveiled its second dedicated global seed fund Index Origin II.

This Week in Tech

A weekly advent calendar of tech history from the archives.

This week in 1990, Tim Berners-Lee and Belgian systems engineer Robert Cailliau formalized the management proposal for the World Wide Web, outlining the principal concepts and defining the important terms behind what we now know as the modern web.

ICYMI

Here are other top stories of the week from beyond LinkedIn in the broader world of tech.

• Salesforce insiders say the performance review system set some of its top salespeople up for failure ahead of layoffs.
• Elon Musk’s SpaceX is in talks to raise funding at a $150 billion valuation.
• Venture valuations for later-stage rounds are down significantly, per new data from PitchBook. While early-stage deal valuations declined between the second and third quarters, the 2022 median remains higher than 2021.
• The fallout from FTX’s collapse continues, with cryptocurrency lender BlockFi planning to file for bankruptcy within days. The company is closely tied to FTX US, with the latter providing the lender with a $400 million revolving credit line.

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