Commitment culture companies, where every employee is part of the family . . . until he/she is written out of the will. By Zoom, no less. Take the case of AirBnb, whose founders frequently preached about building a business that valued people, trust and social goals, all the while taking care to criticize the short term demands of Wall Street. That, of course, was before Covid-19, before a postponed IPO, and before firing approximately 25% of its workforce.
Welcome to the new AirBnB, one less-big, less-happy family. Commitment culture lite.
AirBnb was known for its “AirFam” corporate culture. With conference rooms designed like AirBnb vacation listings, and the roving AirBnbeats acapella group serenading workers, it reveled in its family-like atmosphere. Employees were happy to be part of an enterprise that grew from a few rented air mattresses in 2007 to an international vacation rental marketplace valued at over $30 Billion twelve years later. The family environment was part of employees’ overall “compensation,” part of their identities.
Then, like many a family before it, the skeletons fell out of the closet.
At first, those closets seemed far away. Like Barcelona. After the economic crisis of 2008, the Catalan capital welcomed AirBnb and the prospect of greater tourism income. AirBnb helped transform the city, and not for the better. Overcrowded streets and markets, year-round Mardi Gras behavior, inflated property values, reduced long term rental availability, and a decreased quality of life for local citizens. Protests ensued. Nor was Barcelona alone; it was but one of many AirBnB-altered tourist destinations.
On May 5th 2020 those skeleton-filled closets were much closer to home. They were in San Francisco.
That was the day an emotional Brian Chesky, AirBnb’s CEO, informed his family of workers that he had no choice but to layoff nearly 2,000 of them. Covid-19 had devastated the travel industry and AirBnb was not immune to its ravages. By all appearances, Chesky was saddened by this turn of events . . . well, at least until early July when he happily announced that the company’s formerly postponed IPO was back on schedule.
Thank goodness. For a few months there I was worried that AirBnb might have sacrificed it principles and its employees to Covid-19, not to Wall Street. (One always prefers the “devil” one knows.)
While I criticize AirBnb’s founders, its employees are not blameless. To paraphrase that well-known cinematic philosopher, the Joker, “Why so surprised?” Startup investors look for lucrative exit events. An initial public stock offering is the holy grail of such exits. By definition, an IPO means that the company must conform to Wall Street’s demands and expectations. Goodbye non-conformist corporate culture, hello cost-cutting to meet earnings forecasts. In other words, had employees not been seduced by the Disney-like HQ amenities and the self promoting, cheap talk of senior managers they should have seen this coming.
With corporate growth comes corporate maturity. Enjoy the startup environment while you can. If your company is successful its commitment culture may become less committed.
Mr. Dragone has spent the past twenty years as an acting/consulting CFO for a number of start-ups in a wide range of industries. Peter’s prior experience is that of a serial entrepreneur, managing various start-up and turnaround projects. He was a co-founder of Keurig, Inc.