Airbnb is facing an unprecedented threat from the coronavirus. Here are the veteran execs on Airbnb's board of directors who will be critical to CEO Brian Chesky's success or failure.
There are probably few startup founders who are in as much need for guidance and direction from experienced leaders right now as Airbnb CEO Brian Chesky.
The online travel company's business â like others in the industry â has been hit hard by the coronavirus pandemic. But in addition to just trying to stay afloat, Airbnb has the tricky job of trying to balance that imperative with addressing the needs and interests of the travelers and property managers that use its online marketplace, and without which it wouldn't have a business.
Fortunately for Chesky, he's got an assembly of seasoned operators and financial experts on his company's board of directors. They include Kenneth Chenault, the former CEO of American Express; Angela Ahrendts, who was CEO of fashion retailer Burberry before becoming the head of Apple's retail division; Alfred Lin, who was chairman of and chief operating officer of shoe retailer Zappos; and Jeff Jordan, who served as the CEO of restaurant reservation company Open Table when it went public.
Until a couple of months ago, this board of directors would likely have been laser-focused on a planned IPO that was expected to value the company at $40 billion or more. Now, the directors must apply their business experience to navigating a crisis instead of a Wall Street debut.
Chesky, 38, now meets every Sunday with his eight fellow board directors, he told the Wall Street Journal.
In this crisis "you're only focused on this moment, and all I try to do is just get to next week," Chesky told the Journal.
Interestingly, Airbnb's board does not technically have an official chairperson or lead independent director, though Chesky effectively serves as the board leader, chairing meetings and handling other functions.
According to some media reports there has been flashes of tension between Chesky and certain directors as the company grapples with the crisis, though Airbnb spokesperson Nick Papas has denied the tensions.
The pandemic has crushed Airbnb's business
What's clear is that the board's ability to collaborate and to leverage its collective wisdom will be put to the test by the pandemic.
With governments around the world having restricted the movement of their citizens to try to contain the coronavirus outbreak, little leisure or business travel is taking place. Thousands of flights have been cancelled and hotel operators have laid off thousands of workers.
Some 90% of reservations with recent check-in dates at Airbnb â which dominates the market â were cancelled, according to industry research firm AirDNA. And new bookings in the United States have fallen by more than half in the last two months.
Several Airbnb directors have gone through experiences similar to what he's facing. Chenault, for example, took over American Express right before the dot-com bust hit in 2001. He then led the financial giant through the Great Recession. Ahrendts was in charge at Burberry during that downturn. Jordan was heading OpenTable and guided it through a successful initial public offering at a time when few companies were going IPO.
"If I was the CEO, I'd look at [Airbnb's board] and say, 'Hey, I've got a good, diverse group of people that have been through the ringer. They've had a lot of experiences in the past,'" said Harry Kraemer, clinical professor of leadership at Northwestern University's Kellogg School of Management. "They'll help them get through that as best as any board I could think of."
Airbnb's directors have lots of varied experience
One seeming hole in Airbnb's board is its lack of someone with direct experience in the travel industry, running a hotel chain, say, or an airline, or another one of the online travel sites, such as Expedia. But that's maybe not as big a problem as it might seem, said Kraemer.
American Express, which Chenault ran for nearly two decades, is primarily a financial services company, but it does plenty of travel-related things. People can book trips and hotels through it. It has a corporate travel service. And it offers services such as travelers checks and travelers insurance.
"I think of Amex as a travel company," Kraemer said. "That's basically what they do."
But having direct experience in the industry in which a company operates is not necessarily that important for its board members, he said. Indeed, it can be a benefit to have directors who come from other industries, because they often have different ways of looking at problems, he said. And in many cases, the knowledge and experience they have from their own industries can translate to that of the company on whose board they serve.
Prior to becoming a professor, Kraemer was CEO of healthcare firm Baxter International. Among his board members was Fred Turner, who at the time was the CEO of McDonalds. Turner had no experience in the healthcare industry, but he did have experience managing a complex supply chain and operating internationally.
"He was incredibly valuable," Kraemer said.
The board and Chesky have reportedly been at odds
Crises such as the one playing out right now can lead to a wide range of negative emotions â stress, worry, fear, anxiety â all of which can hamper decision-making and lead to interpersonal conflict. Even companies with well-regarded directors aren't immune to such problems. Indeed, there has already been a report of tensions playing out at Airbnb in particular.
Airbnb operates a kind of accommodation marketplace, helping travelers who are looking for places to stay connect with property managers with apartments, rooms, and houses. Typically, the company allows property managers to set their own terms for reservations, including their cancellation policies. But after the coronavirus outbreak turned into a pandemic and governments started ordering their citizens to stay in their homes, Airbnb decided to override its hosts' terms and allow guests to cancel their reservations and get full refunds. The move infuriated many property managers.
It also ticked off some of Airbnb's directors, because Chesky didn't inform them before making the change, The Wall Street Journal reported.
Papas, the Airbnb spokesperson, has said Airbnb's board and management had "extensive discussions" about the cancellation policy change.Â
But that's not the only area of reported tension. After being close to breakeven in 2018, Airbnb's bottom line dipped deeply into the red last year, long before anyone had heard of COVID-19. Chenault and Mather have been pushing Chesky and the company's management team to cut costs, and have picked up that effort in the wake of the crisis, The Journal reported.
Among the areas Chenault and Mather have been pushing Chesky to cut is Airbnb Experiences, according to The Journal. That offering, which helps travelers book tours, has lost $1 billion, The Journal reported.
Papas has said that instead of telling Chesky to cut the experiences services, Airbnb's board has encouraged the company to keep investing in it.
Airbnb reportedly told employees last month that it is cutting its marketing expenses and freezing most hiring to conserve costs. It recently raised $2 billion in debt financing â at a high cost â to shore up its bank accounts. Even so, the company faces the prospect of running out of cash in the near future if the travel business doesn't revive soon.
But tensions aren't surprising given what's going on
Some investors are unhappy with Chesky himself, according to The Journal, although it's unclear if their feelings have been echoed by any members of Airbnb's board. Those investors have pushed to have Chesky step down, give up some of his voting control over the company, or bring in an executive with experience in turnarounds to help guide him through this period, The Journal reported.
Papas has denied anyone communicated those demands to Airbnb.
Regardless, it's not surprising nor necessarily concerning for such tensions to be playing out in the company's board room, Kraemer said. Similar discussions are playing out at lots of other companies right now; they just aren't getting the same attention as what's happening at Airbnb, he said. Many companies are facing dramatic declines in their business and are having to make tough choices on how to best move forward. When jobs and product lines and the like are on the line, contentious discussions aren't unusual, he said.
"The discussion's going to get heated," Kraemer said. "I would be amazed if there wasn't a lot discussions on [how to react to the crisis] and a lot disagreements."
Here are the members of Airbnb's board and some of their relevant experiences:
