Good morning.
As consumers continue to pack their bags in search of travel experiences despite uncertain times, Airbnb has soared, earning a spot on the Fortune 500 list for the first time. The online marketplace for short- and long-term homestays is betting on the future of hosting, with Dave Stephenson, CFO and head of employee experience, even serving as a host of a cabin with a pizza oven.
The 2023 Fortune 500 list was released this morning. The revenue threshold for making the Fortune 500 list was $7.2 billion this year, up 13% from a year ago. Airbnb landed at No. 450. The company generated revenue of $8.4 billion, up 40.2% year over year, and profit reached $1.9 billion. In its 15-year history, the company reported its first-ever profitable year in 2022.
Focusing on areas of long-term growth
Progress didn’t come without challenges. Airbnb was a fast-growing company, but with the onset of the pandemic, “in March 2020, we lost 80% of our business in the span of several weeks,” Stephenson says. “We were working hard just to make sure that we were going to survive and thrive for the future.”
A shift in consumer sentiment eventually occurred. “When people started valuing the importance of getting together in person and traveling again as COVID receded, or even in the midst of the pandemic, they found that Airbnb is a great way for them to connect with others, get out of their homes and travel,” he says.
In order to survive the pandemic, Airbnb had to become more disciplined and focus on critically important areas for long-term growth, Stephenson explains. The company decided to shut down non-core elements of the business, such as its transportation division, and a magazine, Stephenson says. They moved to a more functional plan where it’s all about the core of the business—hosting, stays, and experiences, he says. Airbnb grew about 40% in headcount in 2019, he says. But in 2020, as the pandemic raged, the company had a 25% reduction in staff.
“Since then, we have just been more modest in our headcount growth, and I think that will continue to be the case,” Stephenson says.
Airbnb executives also expect average prices to come down this year. “We want to ensure our platform offers competitively priced stays,” executives wrote in a letter to shareholders in February. “Starting this year, we will provide new and improved pricing and discounting tools to help hosts understand the final price guests pay and how to set competitive prices. We expect these changes will drive greater affordability and value for guests, support bookings growth, and therefore also help hosts be more successful.”
The art of hosting
My colleague Trey Williams recently talked with Airbnb CEO and cofounder Brian Chesky, who spent six months living in his company’s rentals to get a greater perspective on the experiences of hosts and guests.
“Many of our employees are hosts; we strongly encourage it,” Stephenson tells me. And he practices what he preaches. “I host a cabin, just outside of my home in Seattle, Wash., near Mount Rainier,” he says. “And I host a home in Palm Springs.”
What has he learned by being a host? “I understand some of the challenges of onboarding and becoming a host,” Stephenson explains. “We’ve made over 340 upgrades and improvements to the service over the past 18 months to two years, and a lot of those investments have been to make it easier to host,” like better onboarding with Airbnb Setup, and Aircover, damage protection for hosts.
How does he make his guests feel welcome? “In our cabin, which is in the woods near a ski mountain, we have a couple of really nice hiking trails,” Stephenson explains. “I leave maps and say, ‘Hey, these are a couple of hiking trails that might interest you.’ I leave a bottle of Washington wine that I like. We have a pizza oven there. Most people haven’t necessarily used a pizza oven, so I have instructions on how to use it, and I’ll leave the special flour that works really well. So, they get to experience something they might not normally experience.”
In addition to hosting, for future growth, Airbnb also has a focus on protecting services (improving community support, delivering greater value), and expanding beyond the core services (building the foundation for future products and services), he says.
Stephenson joined Airbnb in 2019. Before that, he was a long-time Amazon executive, ending his tenure with the company as VP and CFO of its worldwide consumer business. Employee experience is critical to Airbnb’s value creation and growth, Stephenson says.
“That’s why the ‘Live and Work Anywhere’ approach to working has been really important to us,” he says. “We know that the best employees in the world are not all within 50 miles of San Francisco.”
Sheryl Estrada
sheryl.estrada@fortune.com
Big deal
Morgan Stanley’s E-Trade released data from its monthly sector rotation study. The top three sectors in April and May were financials, utilities, and energy. The results are based on the trading platform’s customer notional net percentage buy/sell behavior for stocks that comprise the S&P 500 sectors. All three sectors increased between April and May, with utilities increasing from -11.40% to 7.65%, according to the report.
Going deeper
New Gartner research finds there are three key pillars to human leadership that CFOs and finance leaders need in an era of finance A.I.: adaptivity, empathy, and authenticity. “Adaptivity is not just when and where you work, however, it’s who you work with, it’s the extent to which you can control the volume of work, and what you work on,” Dennis Gannon, VP and analyst in the Gartner Finance practice, said during the firm's conference last week. "Of the three pillars, this is the area where finance leadership has performed best, and where their hand is really being forced by the labor market.”
Leaderboard
Bruce Chung was promoted to CFO at NRG Energy Inc. (NYSE: NRG), effective June 1. Chung will succeed Alberto Fornaro, who will be pursuing other interests but will remain with NRG as a strategic advisor until Sept. 1. Chung, 49, has served as head of strategy and M&A since 2016. Previously, he held numerous positions across various areas of NRG focused on new business development since joining in 2008. Before NRG, Chung served in the investment banking division of Citigroup and its predecessor firms providing capital markets and advisory services.
Lawrence Herman was named CFO at Dwolla, a payment services provider. Herman has extensive experience leading global finance teams across various technology sectors, such as payments, cryptocurrency, blockchain, fintech, and A.I. SaaS. He was previously the CFO of Accrete, an A.I. machine learning company. Before that, he served as the SVP and head of finance at Paxful, a global cryptocurrency marketplace and P2P remittance platform. He also has over 10 years of combined experience in finance leadership and strategic planning roles at MasterCard and American Express.
Overheard
“Call me woke—you don’t need to call it DEI [diversity, equity, and inclusion] you can call it whatever you want—I call it good business. It means taking the people that you’re selling to and making sure your workforce looks like them, and making sure you can reflect their values and being able to connect to that. That’s what works for me.”
—Entrepreneur and NBA team owner Mark Cuban said in a talk to political and business leaders on Michigan’s Mackinac Island, news outlet MLive reported.
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