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References
Airbnb. (2020, May 5). A Message from Co-Founder and CEO Brian Chesky. Airbnb
Newsroom. Retrieved November 5, 2021, from https://news.airbnb.com/a-message-from-
co-founder-and-ceo-brian-chesky/
Cherry, K. (2020, March 4). How Do Transformational Leaders Inspire and Motivate
Followers? Verywell Mind. Retrieved November 9, 2021, from
https://www.verywellmind.com/what-is-transformational-leadership-2795313
D’Auria, G., & de Smet, A. (2020, March 16). Leadership in a crisis: Responding to the
coronavirus outbreak and future challenges. McKinsey & Company. Retrieved
November 5, 2021, from https://www.mckinsey.com/business-functions/people-and-
organizational-performance/our-insights/leadership-in-a-crisis-responding-to-the-
coronavirus-outbreak-and-future-challenges
Greylock. (2021, June 8). Brian Chesky on Airbnb's Ethos of People-First Capitalism [Video].
YouTube. https://www.youtube.com/watch?v=TKz9Aohljvw
Hyland-Wood, B., Gardner, J., Leask, J., & Ecker, U. K. H. (2021). Toward effective
government communication strategies in the era of COVID-19. Humanities and Social
Sciences Communications, 8(1). https://doi.org/10.1057/s41599-020-00701-w
Yohn, D. L. (2020, November 10). How Airbnb Survived The Pandemic—And How You Can
Too. Forbes. Retrieved November 5, 2021, from
https://www.forbes.com/sites/deniselyohn/2020/11/10/how-airbnb-survived-the-
pandemic--and-how-you-can-too/?sh=4d756b593845](https://image.slidesharecdn.com/gilhoolyembracingchangeweek12-220119163854/85/Embracing-Change-AirBnb-Analysis-5-320.jpg)
Embracing Change - AirBnb Analysis
- 1. 2 In June 2021, Reid Hoffman of Greylock Partners interviewed Airbnb's CEO and Co- Founder, Brian Chesky, about his company's successful approach to crisis management in the era of COVID-19. Just eight weeks into the pandemic, Airbnb lost over 80% of its business. And within that time, guests requested over $1 billion in cancellations. But policies in place allowed hosts to deny those cancellations, which created further issues for Airbnb (Greylock, 2021). In addition, the compounding loss of revenue complicated matters for the travel marketplace organization, as the company needed to find a way to save money. Fortunately, through strong leadership and a stakeholder focus, Airbnb went from potential destruction to a successful IPO nine months later (Yohn, 2020). Chesky credits his focus on stakeholder capitalism as the reason he was able to make quick decisions to protect all stakeholders and the company as much as possible during the crisis. He notes that one of the keys to Airbnb's crisis management success was making quick decisions, always acting with all stakeholders in mind. In addition, Chesky's transformational leadership style allowed Airbnb to survive an 80% drop in revenue and a significant restructuring, which most companies would not be able to endure. "Transformational leaders help followers grow and develop into leaders by responding to individual followers' needs by empowering them and by aligning the objectives and goals of the individual followers, the leader, the group, and the larger organization" (Cherry, 2020). Overcoming Challenges Brian Chesky exhibited many of the recommendations for effective public affairs communications presented by Hyland-Wood et al. He led Airbnb through its crisis by engaging in clear communication, striving for maximum credibility, and recognizing that uncertainty is
- 2. 3 inevitable. He also communicated with openness, frankness, honesty, and empathy and empowered people to act (Hyland-Wood et al., 2021). As noted above, the company quickly lost 80% of its business and faced $1 billion in cancellations from guests. Policies at the time allowed hosts to keep the money, but Chesky decided to override the policy by siding with health and safety for all stakeholders. And, as such, the company refunded the guests $1 billion. With this decision, the hosts lost money as well. And since hosts are essential stakeholders for Airbnb, the company chose to take out a loan (debt) to give the hosts $250 million as a sign of goodwill and faith in the partnership. Airbnb also started a $10 million fund to help hosts pay their mortgages during the crisis (Yohn, 2020). Noting the need across the world, Chesky called upon hosts who wanted to partner with Airbnb to offer homes for frontline workers who could not safely return home to families while working with infected patients. As a result, over 200,000 hosts provided homes for free or a discount to frontline workers (Greylock, 2021). Most notably is Chesky's approach to laying off over 2,000 employees. In an open letter published on its site, Chesky explained step-by-step how the layoff decisions were made and, most importantly, what the company was offering to those losing their jobs (Airbnb, 2020). In this candid letter, he expressed empathy as he explained the company's restructuring and the need to cut jobs to stay in business. However, he also addressed these important stakeholders' interests by treating "everyone in a compassionate and thoughtful way" (Airbnb, 2020). This expression of "compassion enhances credibility and can lead to more effective communication" for a leader (Hyland-Wood et al., 2021). Through its vow to do as much as it can for those impacted, Airbnb offered 14 weeks of base pay plus an additional week for each year worked at Airbnb as severance pay. Airbnb also
- 3. 4 provided an equity stake to each laid-off employee (and remaining) and one year of health insurance through COBRA. Chesky also personally reached out to other CEOs to help the laid- off employees find other employment. In addition, he established a public-facing alumni talent directory with dedicated recruiters for former employees to opt-in for assistance. Finally, each employee was allowed to keep their laptop to help them find a new job (Airbnb, 2020). Transformational Leadership Through the pandemic, Chesky showcased many aspects of transformational leadership. In interviews, he regularly refers to Airbnb's stakeholder groups and the principles set for each group. Chesky aims to empower those around him to build the company in creative and innovative ways. For example, in the Greylock interview, he reminds CEOs to get emotionally attached and see if they can still decide on an approach based on core principles, all while knowing the impact on the people (Greylock, 2021). Chesky engaged in clear communication grounded in empathy, openness, frankness, and honesty to build maximum credibility (Hyland-Wood et al., 2021). To do this, he started weekly town halls answering all questions asked of him. He said, "I just looked into the camera every week, and I would just try to give incredibly heartfelt messages" (Greylock, 2021). In addition, Chesky (and other founders) made numerous personal calls to employees to answer questions and address concerns during the layoff period. Good leaders pay attention to how people are struggling and take corresponding measures to support them. Finally, Chesky started weekly board meetings (versus Airbnb's regular quarterly meetings) because he said, "I’m going to be making so many decisions, it’s going to feel like a whole quarter goes by every week” (Greylock, 2021).
- 4. 5 Chesky wanted all Airbnb stakeholders to understand each decision and feel a part of the company's future throughout the crisis. These examples align with a McKinsey & Company article about leadership in a crisis. The article states that "Thoughtful, frequent communication shows that leaders are following the situation and adjusting their responses as they learn more. This helps them reassure stakeholders that they are confronting the crisis" (D’Auria & de Smet, 2020). In true transformational leadership form, Brian Chesky included the company stakeholders in his message about facing a crisis head-on. He does not regularly use the word "I" but instead chooses to include everyone ("we"). The following quote from his interview shows his caring nature about the people around him that help every day to bring Airbnb's goals to reality. "If we’re lucky, we’ll be remembered for how we handled the crisis. If we screw this up, we won’t exist, and we won’t be remembered, but we don’t want to be remembered as villains." – Brian Chesky (Greylock, 2021)
- 5. 6 References Airbnb. (2020, May 5). A Message from Co-Founder and CEO Brian Chesky. Airbnb Newsroom. Retrieved November 5, 2021, from https://news.airbnb.com/a-message-from- co-founder-and-ceo-brian-chesky/ Cherry, K. (2020, March 4). How Do Transformational Leaders Inspire and Motivate Followers? Verywell Mind. Retrieved November 9, 2021, from https://www.verywellmind.com/what-is-transformational-leadership-2795313 D’Auria, G., & de Smet, A. (2020, March 16). Leadership in a crisis: Responding to the coronavirus outbreak and future challenges. McKinsey & Company. Retrieved November 5, 2021, from https://www.mckinsey.com/business-functions/people-and- organizational-performance/our-insights/leadership-in-a-crisis-responding-to-the- coronavirus-outbreak-and-future-challenges Greylock. (2021, June 8). Brian Chesky on Airbnb's Ethos of People-First Capitalism [Video]. YouTube. https://www.youtube.com/watch?v=TKz9Aohljvw Hyland-Wood, B., Gardner, J., Leask, J., & Ecker, U. K. H. (2021). Toward effective government communication strategies in the era of COVID-19. Humanities and Social Sciences Communications, 8(1). https://doi.org/10.1057/s41599-020-00701-w Yohn, D. L. (2020, November 10). How Airbnb Survived The Pandemic—And How You Can Too. Forbes. Retrieved November 5, 2021, from https://www.forbes.com/sites/deniselyohn/2020/11/10/how-airbnb-survived-the- pandemic--and-how-you-can-too/?sh=4d756b593845