Nathan Blecharczyk, Airbnb Co-Founder joins Yahoo Finance Live to break down Airbnb’s success in the last few years, how the pandemic has impacted the travel industry, and weigh in on the company’s outlook for 2021.
Let's bring in one of those co-founders here, Nate Blecharczyk. He's not just a co-founder of Airbnb, but also Chief Strategy Officer. He joins us now alongside Yahoo Finance's Dan Roberts.
And Nate, first off, congratulations in order here, man. As I said, more than a decade in the making for the moment. And earlier this year, a lot of people were saying, look, this might not be possible with the pandemic. You guys saw revenues fall nearly 75% in the second quarter. But for you personally, what does it feel like to bring the company across the finish line now, having been through all of that?
And then I look back over the last 13 years. And it's been an incredible journey, because in those early years especially, so many people thought we were crazy, this idea of opening your home up to strangers. And it's been an amazing journey to see this concept spread around the world and become so mainstream.
I guess I'd ask, as we look forward to the end of the pandemic, whenever that is, you know, even once a vaccine begins to be distributed, a lot of consumer behaviors might be changed forever. And I'd ask you if the new normal is shorter stays and people avoiding air travel. Is that a problem for you guys moving forward for the business?
As for the future, it's difficult to predict. But what I'm confident is that Airbnb can adapt to whatever consumer demand is. I do think there will be a vaccine at some point, and I do think at some point folks will get back on airplanes. But whether they're staying near or going far, Airbnb will be there for them to help them connect and have a great stay.
DAN ROBERTS: And Nate, it was also really interesting to see in that S-1 filing the slashing of the marketing budget. You guys ended up cutting your marketing costs in half in the first nine months of 2020 versus the first nine months of 2019.
And it's interesting. It sure looks like everything was fine, in the sense that maybe this is now a brand that really doesn't need to do much brand marketing. The name has become ubiquitous.
Having lived in New York, I remember a time in Airbnb's early days when the subway, for a while, was plastered in Airbnb ads. You're far past that now. You don't need to do that.
NATE BLECHARCZYK: Well, I think the fundamental reason for the strength of our brand is the fact that our product is so unique and differentiated. Most of our hosts, most of our homes weren't available before Airbnb. We've created a platform that empowers people to participate in the global industry of tourism.
And so many people are doing this for the first time. For the most part, they're only on Airbnb. And because our product is so different and allows people to travel and connect so authentically, it creates a lot of word of mouth, a lot of buzz, and it strengthens the brand. So that's why I think we're doing so well, despite having spent almost no money on marketing this year.
AKIKO FUJITA: And Nate, when you think about Airbnb's strategy, what you were building up pre-pandemic, it did feel like you were really going for the entire travel stack here. You had the home sharing. You had the experiences. Also rumors of you getting into flights as well.
The pandemic has kind of forced you to sort of pivot a little. And I wonder if the ultimate goal here is to be end-to-end when it comes to travel. Or is that sort of put on hold because of the shift in demand you're seeing right now?
NATE BLECHARCZYK: Well, I do think long-term that is our ambition, to facilitate the end-to-end trip and really enhance it. That being said, this year has required us to focus more, because this spring was incredibly hard. We did take a big hit when our revenues fell, and we had to do a layoff.
And so as part of that, we really needed to re-prioritize. And we said, let's double-down on what truly makes Airbnb unique, and our core strengths. And that is empowering ordinary people to participate as hosts and to help folks travel in the way that they want to travel right now, which right now is nearby stays. So that's been our focus for the second half of this year. And I think that will continue into next.
AKIKO FUJITA: You have seen incredible growth outside of the US, international amounting to more than 80% of your business now. China one of those markets that you have focused on. And that's what makes Airbnb a little unique, in that as a tech company you have tried to go head-on on China.
And yet, you've faced a lot of pushback, naturally, as any company does operating in China. And I have to wonder, does the opportunity outweigh the risk here in China when you talk about the data localisation concerns that a lot of people have raised as it relates to the Chinese market, having to comply with local regulations-- is that a risk that you're willing to put aside in order to go for the opportunity there? Or do you anticipate further headwinds?
NATE BLECHARCZYK: Well, travel is inherently global. And our mission is to create a world where you can belong anywhere. And China represents 20% of the world's population, and so I think it's incredibly important for us to build something that's inclusive of China. In terms of the challenges, we operate no differently than how Marriott or Hilton or other multinational companies have to operate in China. And so I think this is important to keep working on.
ZACK GUZMAN: Yeah, Nate, just to piggyback off that, I mean, you might not be different in terms of those hotel operators. But it does seem to be an issue, at least internally here. We've been talking to a lot of companies that are looking to expand-- or not expand, rather, and just choose to not work in China.
We heard it from Palantir. We heard it yesterday from C3.ai, Tom Siebel telling us he didn't want to do it. In your guys' S-1, you noted those risks come. And they could have you pull back in terms of your efforts on China. I know you lead Airbnb's operations in China.
"The Wall Street Journal" had you quoted in an internal spat there after an exec chose to resign over some of those issues. And you said, we're not here to promote American values. What did you mean by that, and how tenuous is the growth prospects in China?
NATE BLECHARCZYK: Well, I'm not going to comment on rumors of what was said. But you know, again, I think we have made sure that we align our operating processes with how Hilton and Marriott and others operate. And we've always been very transparent. You can go to our website and learn all about exactly our practices, and it's part of the booking flow.
And we've done quite a lot to protect user data. Any data that isn't directly relevant to a stay in China does not reside in China. So we've made sure that this doesn't impact our broader business. This is only relevant to trips actually taking place in China.
ZACK GUZMAN: Well, if you're facing that and hotels are facing that, there is one area where you are different than hotels and we saw that kind of in the importance of your guys' Q3 numbers and bounce-back. Edison Trends is kind of highlighting the fact that you guys had seen a much stronger bounce back in terms of travel and bookings compared to some of those more traditional hotel chain operators.
And I wonder how much of that, in your mind, is tied to the risks associated with traveling during the pandemic. Our family included going to be staying in an Airbnb over Christmas instead of hotels due to some of those concerns. Talk to me about that and what it maybe signals beyond the pandemic when travel resumes back to normal, and how you see that going in your mind.
NATE BLECHARCZYK: Well, I think two things. One is people right now are hesitant to get on airplanes. But they still want to get out and travel, so they've been traveling nearby. And Airbnb has homes in over 100,000 cities and towns around the globe, including in rural areas. So I think we are well-suited to help people stay nearby in rural areas.
Second, as you mentioned, folks are very conscious about health safety, about maintaining social distance. And so there's the hesitancy about being around other people. They don't necessarily want to be in a hotel lobby or in a restaurant. They're cautious. And so we see people opting to have an entire home to themselves right now, being able to cook their own food in a kitchen, and be with family who's within their kind of-- their bubble.
What does this mean for the future? You know, it's hard to predict. There certainly will be a vaccine next year. And eventually, travel will get back closer to normal. But it will probably take some time. I think no matter what's to come, you know, Airbnb is adaptable.
The other trend I would comment on is just this work-from-home trend. I think that will linger. I think because of Zoom, people don't necessarily-- not everybody has to go to the office five days a week. What I think that allows for is folks traveling, taking long weekend kind of trips more frequently.
They might be getting on airplanes to do so. They might be traveling nearby to do so. So I think that's an interesting trend for that for everybody in travel to watch.
DAN ROBERTS: Nate, it's Dan here again. We keep hitting and talking about this Q3 comeback that the business had, because it's so interesting, especially as it relates to consumer behavior. But what critics say is, well, it was really helped by dramatic cost-cutting. And as we mentioned, having to slash 25% of the workforce, very painful.
You know, once this stock starts listing today, and as we see, no doubt, big gains on day one, it's going to be hard to watch for those 25% of employees who were cut. As we look forward and as the business starts to grow again, I mean, do you anticipate being able to start ramping up hiring again? And what might you say to those people who were cut from the company before the IPO?
NATE BLECHARCZYK: Well, look, I really do hope that the world can get back to-- back closer to normal pre-pandemic. Hopefully that will come sooner rather than later. You know, I'm very bullish on the future of the company and hope we can continue to grow.
We made very clear during those layoffs, which were incredibly difficult for us-- we're a very close-knit company, and everyone is very passionate about the mission. So it was very hard to see them go. We always made clear that we would welcome them back when the opportunity arises. So again, it's difficult to predict the specifics. But these were very good people who were very passionate about the company, and hopefully some of them can come back.
AKIKO FUJITA: Nate Blecharczyk, the co-founder of Airbnb. It's great to have you on on this day, and I really appreciate your time.