BLACKROCK FUTURE FORUM

Purpose in crisis

22-Jul-2020
  • BlackRock

Airbnb Co-Founder and CEO Brian Chesky spoke with BlackRock CMO Frank Cooper about how companies can make purpose real and stick with it, even amid a global pandemic and an economic crisis.

Highlights include:

  • Why it’s critical to put corporate purpose center stage during a crisis
  • How to foster deeper connections with employees and customers
  • The challenges of managing multiple corporate stakeholders
  • Why purpose and profit are increasingly intertwined
  • Frank Cooper: Thank you, Zach.  I'm excited to be here today with Brian Chesky, Cofounder and CEO of Airbnb.  We’re at a critical moment in our society overall, but we’re also at a critical moment in business where purpose during this crisis, I believe, will become one of the most critical factors in determining who emerges from the crisis more strongly.  And as most of us know, when it comes to purpose, more employees are demanding it, more customers are expecting it, more communities are requiring it.  But, the fundamental question we hear virtually every day from leaders who are grappling with purpose is how do you make it real, how do you make purpose real, and how do you actually make it real in periods of a social crisis?

    And so, I'm excited, Brian, to have you with us today and really appreciate your taking time to be with us during the Future Forum. 

    Brian Chesky: Well, thank you for having me.

    Frank Cooper: So, I want to – absolutely.  I want to start by digging into how purpose is discovered or revealed.  You know, my view is that purpose is not invented.  It’s revealed or discovered.  But specifically, how Airbnb found its purpose, its why.  It’s 2007-2008.  You're living in San Francisco.  It’s the beginning of the global financial crisis.  Millions of people are losing their jobs and there’s a critical election coming up. 

    In the midst of all of this, this chaos, this anxiety, and this uncertainty, you decide to launch Airbnb.  In the beginning, at that moment, was your focus on purpose?  Was it purpose-driven action or was it something else?  And if not, if it wasn’t started with that, how did Airbnb find its way to being a purpose-driven company?

    Brian Chesky: Yeah.  That first weekend, my purpose was to make rent so I had a place to live.  I mean the way it started, I was 26.  I'd just turned 26-years-old.  I was a designer by background.  I'm living in San Francisco with my roommate, Joe, and we can’t pay enough, we don’t even have enough money to pay our rent in San Francisco.

    And it turns out that weekend, an international design conference was coming to San Francisco.  All the hotels were sold out and we had an idea.  We said what if we just turned our house into a bed and breakfast for the design conference.  I didn’t have any beds, but Joe had three airbeds.  We pulled the airbeds out of the closet.  We called it airbedandbreakfast.com.  We ended up hosting three people that weekend, Michael, Kat, and Amol.  And you know, that was our purpose back then.  Like we didn’t think on it like 12 years later to be like talking about it. 

    But something really special happened.  Well, we were able to make rent.  That was pretty important.  But something more special than that happened.  You know, these three designers like ended up living with us.  We brought them into our homes.  We introduced them to our friends.  We took them to this conference.  We kind of shared our like hopes and dreams and, you know, like what we wanted to do in our lives, designers and all this kind of stuff.  And that’s I think when we realized like there is something deeper here.

    And we thought like, wow, we can get paid to like meet cool people.  And I asked Joe, I said who’s the best engineer you know.  He said the old, my old roommate Nate is.  And we set out to build Airbnb. 

    But to answer your question, it wasn’t ‘til years later when we actually put words to what we did.  But, I think that what really happened at Airbn – Airbnb back then was the power of, you know, human connection, the idea that like you could like kind of just have a meaningful connection with somebody else, belong.

    And so, years later, you know, we kind of put words to it and we basically said our purpose is to – is really this idea that you can belong anywhere. 

    And I think that a mission is the reason people actually come to work every day.  It’s the reason people actually buy your products.  It’s the reason that people actually want you to exist.

    I love that when somebody once said imagine your company’s on the brink of disappearing and/or it does disappear and your customers and your employees and your partners have to go to your eulogy for your company.  What would they say?  Whatever they’d say at the eulogy, that’s why you actually exist.  That's how you really know.  And I never really thought I'd have to ever have done that exercise in my head until four months ago when a global pandemic shuts down all of travel and suddenly our business flashes before our eyes.

    Frank Cooper: I love that.  What I’ve found is that in the work I’ve done around purpose is that when the employees, the workforce, has a – they have a personal connection to the true purpose of the company, it flourishes.  You don’t have to have posters around the office.  You don’t have to have the Sizzle video and the nice statements.  How do you get it into the hearts and minds of the workforce?

    Brian Chesky: Yeah.  It’s a really good question.  I mean, a lot of crazy things we did.  I interviewed the first 400 employees and around the first like 100 or so I tried to convince them to join.  And after that, my final interview, I try to convince you not to join, because I kind of realized I'd rather make sure you really, really want to be here rather than trying to sell you to be here for all sorts of reasons that aren’t really what it is that we’re doing.

    So, we tried to really make sure that everyone came for the right reasons.  The reasons are like the same, that like actually what we care about, you care about, too.  That's really basic.  And so, one of the things we did is we created these things called core values interviews, where we trained people that weren’t in the direct line of reporting of the person interviewing to be able to interview the people just for culture, just to make sure they will be successful here.  And they had a veto that the hiring manager couldn’t override.  It can only get escalated to me.  That was actually really, really important. 

    I also think, you know, employees notice every defining action you make.  And like you, your culture are your most defining actions.  It’s the rituals, the rhythms, the things that happen when you're not in the room.  But, it's also the things that are most defining.  Whatever those most defining things are are the things that represent your purpose, because everything you do ideally ladders up to that.

    And I think it’s really easy for people to think they’re coming to work for all sorts of reasons other than your purpose.  And it, honestly, like the word purpose, let’s just take it really literal.  The purpose is the purpose.  It’s the purpose for you to come to work.  And so, I think it’s like really important to constantly be putting in your head like this is what I'm doing and reminding people of what they’re doing and why they’re doing it.  And I think really doing it through defining actions, taking really bold actions that basically make people like – I mean ideally, they’re like non-obvious decisions that seem hard, you know, that really, really seem hard – you made a compromise or you did something that took courage – and then connecting that to we did this because of this, this being our purpose.  This is why. 

    Ideally that, those would be the demonstrations.  And you do enough demonstrations and then other leaders follow you and they start doing demonstrations.  And then suddenly, what your purpose is that you say becomes real because you have demonstrations.

    But, it’s all about walking the walk.  It’s all about making sure people all like really demonstrate it.

    Frank Cooper: I love that.  You know, I imagine some CEOs and leaders are sitting in the audience and they’re thinking, you know, okay, Brian, you know, that sounds great.  You know, you’re from Silicon Valley.  You guys are – you guys have the high-minded ideas and ideals and, you know, you guys are always pushing the envelope.  You know, my company, you know, we’ve been around for 50, 75, or 100 years.  Is this purpose thing, is it just for new, newer companies, for the kind of leading-edge companies that are starting out?  Or can a company that’s been around for 50, 75, or 100 years find its purpose and lead?  If you were advising a CEO at a company that’s been around for 50 to 100 years, what would you say to that CEO about purpose-driven leadership within their company?

    Brian Chesky: Well, I would repeat back something you said, and I’ll just add to it.  You said companies don’t invent their purpose, they discover it.  If that’s true, and a company’s been around for 80 years, then they already have a purpose.  They just have to discover it.  They have to bring it to the forefront.

    Every company that’s been around for decades, think about it.  The longer a company’s been around, the more likely they already have a purpose.  They already have ways of doing things.  They already are distinct.  They grow distinct with age.

    So, I'd say anyone that’s at a company that is a not a newfangled company, not a Silicon Valley company, that’s been around for a long time, they’re likely at a company with a deep purpose.  It’s about discovering it.  I think you discover the company by really understanding like what unique reasons, what are the unique reasons employees come to work.  Right.  There’s like basic reasons, like people need a paycheck and maybe the job was convenient and this and all that.  But what were the unique things?  What were the most defining moments in the company’s history?  What can we learn about that?  And if the company wasn’t around, what would be worse about the world?  What would be – would anyone notice?  And if so, what would that world be missing?

    And I think really understanding that and I think that we don’t need to hold the purpose to, you know, our purpose is to like unleash the human spirit through blah-blah-blah and make the world a better place.  Like it can be really basic.  It can be really basic, honest things that are an encapsulation of defining moments and defining people.

    I also think another way of doing it is take the people in the organization or the early customers or the evangelists.  Maybe you’re a company who you launch a product and like you have evangelist customers or maybe you have a company where you have employees who are deeply passionate.  I think they hold the clues.  And a lot of exercises around values and the mission that are successful, you go to the source, the source of people with most passion.

    And I think these corporate exercises that are very unsuccessful, like you’ve got a bunch of executives kind of a little disconnected from the source, the passion, the roots, and they’re doing kind of a corporate exercise.  So, I think there’s always the source.  There’s always the roots.  You’ve been around for decades.  You already have a purpose, because if you didn’t have a purpose, then like why are people like coming to work for multiple decades?  There’s got to be a reason other than just getting a paycheck.

    Frank Cooper: You know what’s fascinating is that if you rewind back a couple of years and you looked at book titles, there are a bunch of books with the word purpose in the title.  In fact, if you wanted to get published, yeah, it might not be a bad thing to do that.  And a bunch of CEOs and leaders were saying, hey, I'm purpose-driven and the economy was doing fairly well.  People were feeling good.  Stock price was strong.

    We’re now in the midst of a deep crisis and some of the skeptics will say, you know what?  That purpose thing was fascinating.  It’s good.  I want to hold onto it, but I'm going to put it on hold right now, because I'm in the crisis and I'm fighting through.  I'm fighting for my survival. 

    What’s your perspective?  How do you manage Airbnb through this tumultuous time where, you know, we are trying to survive but we also want to emerge stronger?  How do you put purpose in perspective in a time of crisis?

    Brian Chesky: Well, honestly, I can’t think of a better time to put purpose into the center of the company than a time of crisis.  In other words, a way a company could discover its purpose is to look at prior crisis and see how they handled it and what emerged and what was unique.  And I, you know, I just want to back up and say the following. 

    I came back from the holidays, like many people who are fortunate enough to go somewhere for vacation or, you know, kind of holiday season.  And I came back this January feeling pretty good about myself and pretty good about the company.  We had a pretty good run over 10 or 12 years, and we were planning to go public.  And, you know, we were, you know, one of the new companies that had been very successful over ten years.

    And then suddenly within six weeks we lost 80% of our business, 80% of what we had built more than a decade creating.  And in that moment, I saw our business flash before our eyes.  It felt like I was staring into a travel abyss.  There were reporters writing headlines like will Airbnb exist and will they survive the coronavirus.

    And in that crisis, in that abyss for us or that seemingly abyss, I started getting emails and calls and text messages from early employees, early community members reading these articles saying we do want Airbnb to exist.  And I started asking myself, like again, like why do they want us to exist.  And I think the reason that they wanted us to exist was the thing that made us most special and it wasn’t the stuff that everyone else does.  It’s the idea that at the end of the day what we’re really just trying to do is help bring people together in communities all over the world and that is a pretty special thing. 

    And it’s actually even more special now during a pandemic, because there’s also another pandemic or epidemic happening in this world.  It’s a epidemic of loneliness, an epidemic of division, epidemic of disconnection, isolation, race.  You can talk all these words and they’re all things that are basically obstacles to people like connecting and coexisting together.  And that seems like it’s as we get more digitally connected, it doesn’t seem like it’s totally getting better.

    And so, suddenly we start to think to ourselves like, yeah, it’s pretty obvious.  This is really important.  And in the midst of the crisis, suddenly when your business drops by 80%, everything breaks at once.  I’ll give you an example.

    We had more than one billion dollars of reservations that customers, guests, had booked on Airbnb.  It wasn’t our money.  It wasn’t the hosts’ money.  It was money we were holding on behalf of the hosts and then you pay the hosts when the guest checks in.  Suddenly, more than a billion dollars of cancellations come in.  What do you do when a billion dollars’ worth of customers want their money back but the people that depend on the money, hosts, are telling you they need this money to pay their rent or their mortgage? 

    That was the first test in how do you manage multiple stakeholders?  I mean before this, by the way, like I had written a letter like talking about being a, quote, 21st century company, basically being a multiple stake – multi-stakeholder company and it was very much I think I really, you know, and I wrote it January 2018.  It was very consistent with I think Larry Fink wrote.  But it was a very intellectual concept, right, how do you balance stakeholders.

    Now, I have a billion dollars we have to manage.  Who gets that money?  And ultimately, we decided to at that moment that we were going to have to make a series of defining decisions during this crisis and that these decisions were going to be leaving indelible marks over the course of a decade. 

    And I decided at that moment as a team that we were not going to make, quote, business decisions.  We were going to make, quote, principle decisions.  A business decision is a decision you make when you try to optimize for the outcome and the outcome usually benefits the corporation.  A principle decision says you know what?  Things are so bad, they’re so crazy, I don’t know how they’re going to end.  How do I want to be remembered? 

    You usually want to be remembered for doing what you think is the right thing.  It actually kind of works out that way.  It’s actually much more simple.  And so, that’s what we started doing.  We tried to make a series of principled decisions, including with the cancellations. 

    So, we decided to refund the guests, because we didn’t want them feeling like they were going immortal hazard traveling in the midst of a pandemic.  We ended up giving $250 million of our own money to hosts.  We didn’t ask for the money back.  That was a big deal.  And then we, you know, had to do a series of other decisions.

    00:25:31

    But I actually think, you know, your purpose is likely how you survive the crisis, not something you put on the shelf to revisit after the end of the crisis.

    Frank Cooper: You know, what’s fascinating about that, you mentioned earlier purpose requires courage and commitment and consistency.  And, you know, I think in the midst of a crisis what you just explained certainly demonstrates that. you know, the other interesting thing about a deep social crisis is it reveals the pain points and the tensions that exist beneath the surface of everyday life in society.  You know, and the coronavirus pandemic has, among other things, has brought to the surface of mainstream culture issues of racial injustice and racial inequity, as well as a related topic of diversity and inclusion.  You know, as Airbnb seeks to create a community and connection through hosts and guests, how do you think about mitigating the inevitable challenge of bias?

    Brian Chesky: Yeah.  It is a big challenge and I have to admit my cofounders, Joe, Nate, and I, three white guys that were about 25-26 years old  starting Airbnb, we hadn't experienced what others in our community experienced. 

    In 2016, there was a hashtag on Twitter that was trending, and the hashtag was #Airbnbwhileblack.  And that was basically a bunch of black guests, primarily African American in the United States, although it was really a global phenomenon but it was mostly most of the attention was in the United States, were describing discrimination and bias that they were experiencing when they tried to book an Airbnb because in Airbnb you often would see the photo of the guest.  The whole point was to connect.

    Well, when there’s an opportunity for connect, there’s also an opportunity for discrimination and bias.  And this became an existential crisis for us, right.  If our whole purpose is to help bring people together, discrimination and bias is a major obstacle to that purpose. 

    We declared it an emergency and I think one of the things is, you know, a lot of times I think there’s an instinct of leaders when there’s a crisis to not jump on it right away.  We always wanted to feel like we made a bigger deal about a crisis than the public did.  So, if the public is a eight out of ten on outrage about the crisis, we’re going to be a 20 out of 10.  We’re going to be more outraged than the public, because either we get dragged into the future kicking and screaming or we could lead our way into the future.

    And so, we always want it as a principle that in a crisis we write out what does the world expect of us.  And, you know, always the goal was we must do more than the world expects.  We – because if you do what the world expects of you, you get zero credit.  Like – and like you always end up falling short.  So, we said we have to skate into the future of where the world is going and choose to be a mirror of society where it wants to be.  But that gets really hard, because now you have to start admitting stuff, like you’re not where you need to be.

    So, we did a whole bunch of work and over the last four years it’s culminated in a partnership with the largest online civil rights group in America, Color of Change.  They have never done a partnership with a tech company before.  And we partnered with them to work on a project called Project Lighthouse, which essentially is a kind of huge commitment to try to end discrimination on our platform by measuring it.  No internet company has tried to measure the amount of bias and discrimination on their platform in a systematic way and while working with privacy groups.

    We are going to now measure the amount of discrimination and bias that we can see on the platform so we can better design the platform to hopefully reduce it in the years ahead, because if our purpose is to do something, and we’ve got to be honest, this is an obstacle to it, then this has to be a priority to address.  So, that’s a journey we were on.

    Frank Cooper: Yeah.  Brian, I think we have time for one last question.  And, you know, I'm sure, you know, people recognize, and they commend you and Airbnb for embracing purpose and ESG and diversity and inclusion and that’s all great.  But, is it profitable?  You know, do you see purpose and profit being at odds?

    Brian Chesky: Today, companies aren’t just entities that make things.  Today, companies are entities that stand for things.  And when you buy something, you not only buy what they do, you buy why they do it.  That is how billions of young consumers are going to think.  And society, businesses are becoming so big, you know, so I think the best thing for shareholders is that society wants you to exist.  I think that’s the best thing.  So, I honestly think a purpose-driven company is the very best thing for society. 

    I’ll end with one last story.  In the midst of the crisis, our business drops by 80% and we don’t know how long the recovery is.  And we made a series of decisions that we thought were the right things, not knowing what the outcome would look like. 

    And something kind of remarkable started happening.  Our business started coming back.  And as of today, our business has actually returned to 2019 levels and this is without us spending a planned $800 million in marketing.  We cut marketing by $800 million and our revenue is still now at or our gross bookings are at last year’s levels.

    I can’t prove to you all the reasons why that is and there’s probably a whole bunch of kind of systemic, kind of industry-oriented winds to our back that afforded that and it might be pent up demand and, well, there’s a whole bunch of things.  But, I will say I do think that there was some benefit to some of the decisions we did make that I think drew people back to Airbnb

    I do think people pay attention.  I do think it affects the way they buy things.  And every year it’s going to affect it more than ever before.  And as the problems of the world get bigger, almost every problem in the world is a global problem.  There’s very few problems that are limited to a single geography.  And I think if there was ever an example of that, this pandemic’s a reminder that problems are global, and they can’t just be governments rising to the occasion.  There are going to be companies and that citizens are watching, because citizens are also consumers.

    And so, honestly, I think the very best thing for business and for shareholders of these companies, for people to want these companies to exist and I think here’s a way forward, something that Larry Fink talks about, just following your purpose.

    Frank Cooper: Brian, this has been a fascinating conversation.  I thank you so much for taking time out of your schedule to spend time with us at the BlackRock Future Forum.  We wish you and the entire Airbnb community well.  Thank you again.

    Brian Chesky: Thank you very much.  Thank you.

    Frank Cooper: And with that, I’ll toss it back to Zach.

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Brian Chesky
CEO, Airbnb
Frank Cooper
Chief Marketing Officer, BlackRock
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