- Warren Buffett advised Airbnb CEO Brian Chesky to “get rich slow” at a lunch years ago.
- Chesky sped up the process on Wednesday by filing to take his home-rental company public, even though it’s still battling the coronavirus pandemic.
- Airbnb’s bosses cut costs, raised $2 billion in capital, and laid off 25% of their workforce earlier this year as they expected annual revenue to plunge more than 50%.
- More positively, Airbnb customers booked more than 1 million nights of future stays worldwide on July 8 for the first time since March.
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Warren Buffett once advised Airbnb CEO Brian Chesky to “get rich slow.” Chesky sped things up on Wednesday by filing to take his home-rental company public, despite the coronavirus pandemic continuing to weigh on its business.
Buffett, a billionaire investor and the CEO of Berkshire Hathaway, made the comment during lunch with Chesky and Amazon CEO Jeff Bezos, Chesky said in a PandoMonthly interview in 2013. Bezos asked Buffett why everyone doesn’t copy his simple investing strategy and make a fortune.
“Because no one wants to get rich slow,” Buffett replied.
‘Getting rich slow isn’t actually slower’
Chesky underlined the wisdom of Buffett’s approach in a Fortune interview in 2017, after Airbnb was privately valued at $30 billion.
“Nothing about Airbnb was slow,” he said. “It’s only nine years old. But I do think that it’s been helpful for us to be able to go a little slower and take a little bit of a breather and be a little more thoughtful.”
However, Chesky added that tapping the brakes at a fast-growing company is tricky and can lead to work piling up in the future.
“Getting rich slow isn’t actually slower,” he said. “It’s slower in year one, but it might be faster in year seven.”
Airbnb didn’t immediately respond to a request for comment from Business Insider.
Chesky and his cofounders are attempting an IPO shortly after the toughest period in Airbnb’s history. The coronavirus pandemic sparked widespread lockdowns earlier this year, devastating global travel and eviscerating demand on Airbnb’s platform.
Chesky wrote in May that Airbnb’s revenues were forecast to plunge more than 50% this year. He responded by slashing costs, raising $2 billion in fresh capital, and laying off 1,900 employees or 25% of the group’s global workforce. The measures were intended to help focus and “evolve” the company for the post-virus era, he said.
Airbnb also refunded customers who were forced to cancel trips, and set aside $250 million to reimburse hosts who lost bookings. Bookings rebounded in June but were still down 30% versus the same period last year, Bloomberg reported.
The overall outcome was a 67% year-on-year plunge in revenues to $335 million last quarter, which fueled a $400 million loss before interest, tax, depreciation, and amortization, Bloomberg said.
More positively, customers booked more than one million nights of future Airbnb stays worldwide on July 8 – the first time that bookings reached that level since March, Airbnb said.
Airbnb’s recent challenges call into question why Chesky is pushing to list the company this year, potentially disregarding Buffett’s advice. One reason could be pressure from employees to go public before lucrative stock options expire, The Wall Street Journal reported.
The stock market’s swift recovery may also be a factor. Both the S&P 500 and Nasdaq closed at record highs early this week.