Over the years, Airbnb CEO Brian Chesky has rejected investor appeals, followed the leadership of other Silicon Valley unicorns, and publicly listed housing rental startups because he made it a reality. The dream of becoming a one-stop shop for leisure and travel. At the peak of the COVID-19 pandemic, he is now pushing for an initial public offering.
After Chesky co-founded the company with his former roommates Joseph Gebbia and Nathan Blecharczyk for 12 years, Airbnb’s goal is to complete an initial public offering (IPO) on Nasdaq next month. The long road to an IPO has frustrated many investors and employees, who are waiting for the opportunity to sell their Airbnb shares on the stock market.
Reuters interviews with more than a dozen Airbnb executives, consultants, investors, and employees revealed that Chesky put aside the IPO plan because he tried to transform the company into a mature travel agency and added “experience” so that guests can Participate in activities such as book-guided tours of local attractions during the holidays. The IPO prospectus shows that by increasing investment in these companies, he sacrificed Airbnb’s profitability.
Chesky abandoned his expansion plan and committed to listing, which has endured years of pressure from investors and employees, and the deterioration of Airbnb’s financial situation during the pandemic. Airbnb is preparing to seek a valuation of about 30 billion U.S. dollars (approximately Rs 22,244,487 crore), which is lower than the USD 50 billion (approximately Rs 3,70,813 crore) that investment bankers told Chesky that the company may already be in two listed companies Valuation a few years ago.
Ron Conway, founder of SV Angel, said: “Chesky is a founder. His dream is not to go public, but part of the process of satisfying all stakeholders and rewarding them.” Often with him Together.
Airbnb declined to comment, and Chesky declined to comment through a spokesperson.
In 2011, Airbnb’s valuation exceeded the $1 billion mark and officially became a technology unicorn. As Airbnb raised more funds from investors, Chesky refused to go public. He allocates time between running the company, visiting the property and developing experience for the guests.
Conway said: “He now has a suitable house, but for many years, he will try a new Airbnb every night. He will stay with everyone for a few nights. In the trunk of his car, he will have Own belongings.”
Investors are increasingly frustrated by the elusiveness of the IPO. In 2017, Lawrence Tosi joined Airbnb as chief financial officer from the buyout company Blackstone Group Inc. two years ago
A source said that Tosi has also begun negotiations with investment banks on the initial public offering of stocks, which will put Airbnb’s valuation between $45 billion and $50 billion. The source added that he did so as requested by Chesky, who had asked Tosi to prepare Airbnb for the IPO in the first quarter of 2018.
But then, Chesky cancelled Tosi’s IPO preparations. He published a memo describing Airbnb’s focus on “unlimited time frames,” a clear sign of his decision to avoid quarterly financial disclosures by publicly listed companies.
Tosi clashed with Chesky, believing that the future of Airbnb lies in its core business of vacation rental and business travel. Delaying an IPO to expand the experience business will waste funds and make the company conditional. Worse. This quarrel led Tosi to leave Airbnb in 2018.
Chesky maintained the prospect of an initial public offering for investors, but it wasn’t until September 2019 that Airbnb announced that it would go public sometime in 2020 before finalizing its plan. Chesky responded to the frustration of many employees when signing the statement. The source said that the company has been granted stock options, which will expire in early 2021. If the company is not publicly listed and they cannot sell shares by then, they will lose These stock options.
Then in March, the new coronavirus outbreak shook Airbnb. The reservation bottomed out and the guest cancelled the reservation.
Chesky decided to raise funds again. However, the previous fundraising round was based on the prospect of rapid growth rather than crisis. If the San Francisco-based company went public, it could have raised funds by selling shares on the open market.
The remaining option is debt, and it is expensive. Airbnb received $2 billion in term loans from multiple investment companies including Silver Lake and Sixth Street Partners, with an annual mixed interest rate of more than 9%. In contrast, Uber Technologies, a ride-sharing company that also relies on a fragmented economy, provided $1.5 billion in term loans in 2018 at an interest rate of 6.2%.
Some of Chesky’s ambitious plans, including making Airbnb TV shows and movies, are not in his vision, because he fired a quarter of his employees and cut his marketing budget.
He focuses on revitalizing Airbnb’s core housing listing business by transitioning from urban apartments that people hope to rent during the pandemic to vacation homes. The turnaround was successful, and Airbnb achieved a profit of $219 million in the third quarter.
However, it has never achieved an annual profit and lost nearly 700 million US dollars in the first nine months of this year, which is a far cry from its performance two years ago, when its profit was only 17 million US dollars two years ago.
Sources said that at the Airbnb board meeting in late July, Chesky signed the IPO agreement.
“When COVID-19 was released, Chesky had to overturn a series of initiatives that had been in place for three years,” said Michael Ovitz, co-founder of Creative Artists Agency and informal adviser to Chesky.
“He was really affected by this, and it became the core of everything he wanted to do.”
© Thomson Reuters 2020
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