Airbnb, Inc. (ABNB) Earnings Call Transcript & Summary

All right. Good morning, everyone. Welcome to day 4 of our 2022 live Morgan Stanley TMT Conference. We're thrilled today to have Brian Chesky, the CEO and Co-Founder of Airbnb, with us to have a nice fireside chat about travel, all the excitement at Airbnb and how you think about the platform. Thanks for joining us.

Well, thank you for having me here.

It's good to see you live.

It's good to be here in a hotel.

Let me do the disclosures. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures, or they're also available at the registration desk. Some of the statements made today by Airbnb may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Airbnb undertakes no obligation to update them. Please refer to Airbnb's Form 10-K for a discussion of the risk factors that may impact actual results. So far, so good.

Okay. I want to start with a high-level discussion about the way in which the platform has evolved. There's been a -- it's been a really eventful last 2 years between pandemic, reopening, new variants and now sort of hopefully now further reopening, but there is more macro uncertainty. Talk to us about how your management style, your focus and the way you're thinking about the platform has changed over that period? And then any comments on the current unfortunate situation in Europe and Ukraine?

Yes, for sure. Well, why don't I, first of all, thank you for having me today. Maybe I'll start with Ukraine and then I'll kind of then talk about the crisis. It's a very, obviously, heartbreaking situation. And one of the things I've learned over the last 14 years is whenever there's a lot of global conflicts, we find ourselves at the kind of periphery of those conflicts. For example, last August, when there was the major humanitarian crisis in Afghanistan, we had tens of thousands of people leaving Afghanistan. And a lot of people were asking where are they going to stay? So we made a commitment last August to provide housing for 20,000 refugees. It was a pretty audacious goal. How do you house 20,000 refugees coming from Afghanistan? But we were able to announce a couple of weeks ago, I think it was like February like 20-ish, around that date, that we had housed officially 21,000 Afghan refugees, and we decided to raise the goal to 40,000. And I thought, okay, we can do this. We're going to go from 21,000 to 40,000. And then 3 days later, there's an invasion of Ukraine. And at that point, it became clear that here we go again. In effect, this is probably going to be an even bigger crisis. And I think that whenever there's a global crisis like this -- well, let me tell you a story. The weekend after Putin invades Ukraine, it's a Saturday. I called the entire executive team together, and we're trying to figure out what our response is going to be. Of course, we're going to provide housing for refugees, but how big are we going to go? And I remember somebody on the call saying like this is the biggest crisis of our lifetime, the biggest conflict of our lifetime. I don't -- I was a kid when the Soviet Union was around. I don't remember any big global conflicts. But I heard, obviously, if this is the biggest crisis in Europe since World War 2, I asked myself, if I was around during World War 2, and I had a company during World War 2, what I have been wanting to remember to do, I'd want the world to know that Airbnb did everything we could to be able to help people. I mean, I think the entire world needs to be able to help. And so how can we help? Well, we have housing. And so we mobilized our host community, and we made a goal to house up to 100,000 refugees leaving Ukraine. Now as you know, there's about 2 million refugees have now left this country, and 17,000 people since February 28 have opened their homes for free or a discount. And we're getting more than 1,000 people a day in Europe and around the world adding homes for refugees. And I mean, ultimately, there's a lot more than 100,000 refugees. And so if we can provide housing for many more than 100,000, we will. It's a limited number of hosts we have. And so I'm trying to get the word out. So that's what I thought we were going to do for the crisis. Then I noticed something on Twitter. Somebody named Quentin Quarantino, not Tarantino, helped play in -- I don't know who he is, decided he had the idea to send money, he booked an Airbnb in Ukraine even though he wasn't intending to stay in Ukraine. It was a way to basically send relief aid. And all of a sudden, it goes viral on social media. And within 2 days, there were 60,000 nights booked and nearly $2 million sent to people in Ukraine. This is totally different than just sending generic aid because people had the opportunity to pick the person they want to support. They can read their stories. They could send them money, but more importantly, they would get back a letter. And in that letter, they talk about being like underground sheltering in place. And it was like truly amazing. And I feel like if there's a demonstration of our platform and what makes us different, it is that. It's the idea that we're not an OTA. We're not just a marketplace. I guarantee you, people aren't sending relief aid to hotels in Ukraine. But they are to people. There's something different about Airbnb. And I think you learn a lot about people in a crisis. And I'm really proud of the way the company stood up in this crisis.

Incredible. That's an incredible story. So I'll give you [ applause ].

Thank you. So that was one -- so now let's go back to the other crisis because there's been more than one crisis in the last 2 years. There was a pandemic. And like many of you, I came back in the beginning of 2020 thinking my life was going down one road, not realizing that all of a sudden, in a matter of weeks, the entire world would get turned upside down. And we were preparing in January and February to go public, presumably to go public later in 2020. And all of a sudden, I noticed that our business starts dropping precipitously in China. It dropped 80% in a matter of weeks. And we never saw anything drop more than like 10%, right? This is like falls off a cliff. And I remember making a very innocent statement. I said -- this is probably late January 2020. And I looked around the room, I said, if this thing spread outside of China, it's going to be really bad. And of course, it moves west. And all of a sudden, our European business drops. And over the next 8 weeks, we lose 80% of our business. And to lose 80% of your business at our size, preparing to go public is like an 18-wheeler, you're going 80 miles an hour and slamming on the brakes, like it gets very, very dangerous. And I remember calling a Board meeting that first Sunday of the crisis. And after the Board meeting, one of my Board members named Ken Chenault, he's a former CEO of Amex, he's our lead independent director. And he said to me, he said, "I was around during -- I was CEO during 9/11. I was CEO during 2008, and this is probably going to be like 10x bigger than that." And of course, it turned out to be from a kind of impact on travel probably like 10x 2008 or 9/11 crisis. And he said, "This is your defining moment as a leader." That's what he said. And it like -- obviously, I let that sink in. And I always believe that a crisis is a terrible opportunity to waste. I also have a lot of experience in crisis because Airbnb was kind of borne out of a crisis, a crisis not being able to pay a rent, a crisis of The Great Recession in 2008. So the first thing I did is wrote down a series of principles for this crisis. I said, first, we're going to act very quickly, really quickly. And I think we've demonstrated to probably have acted faster than anybody in travel and probably as fast as just about anyone in tech. The second thing I said is we are going to act with all of our stakeholders in mind. Just because it's a crisis doesn't mean somebody is going to win and somebody is going to lose. I said I don't want to be a villain. I want to be remembered for having done the right thing. And I said the final thing is, I know this seems like a dark moment, but we are going to play to win the 2021 travel season. Even in our darkest of moments, we're thinking about how to benefit as we really simplified the company. We were 10 divisions. I had studied other companies that had been through a crisis. The biggest crisis I've seen in the last 25 years was Apple, 1997, 90 days from bankruptcy. Steve Jobs comes back, there are divisional structure. He shutters almost all the product lines, takes the business unit organization, goes to a functional organization, and that's exactly what we did. We put transportation on pause, travel, content, I could list all the things we put on pause. We went back to a functional organization. And then we said, if we could only save half our company, which part would we save? And we said the part we're going to save is the part that's most special. We're going to go back to our roots, back to the original idea of everyday people sharing their homes and experiences. And then we got to do the thing that every CMO has ever dreamed of doing: turning up 100% of marketing and sees what happens. And nothing really happened, [ to my knowledge ]. So we were spending like -- I mean, not nothing, but not a lot. Our traffic came back more than 90% of what it was before the pandemic, even before we returned to marketing. And then suddenly, there were a bunch of lessons. The first lesson was that our brand is incredibly strong. We're a noun and a verb used all over the world. We do not need to buy customers. That 90% of our traffic is free and direct. And the reason we have a lot of free and direct traffic isn't because we're good at marketing. It's because we have something unique and different. The reason why it's something unique and different is because we have 4 million hosts. Of those 4 million hosts, 90% are individuals. And those individuals, the vast majority don't list anywhere else. They're everyday people in the United States, they're school teachers, health care workers and students. Those are the top 3 professions. 55% of them are women. And they're renting the home they live in. And so what Airbnb offers, they can't get anywhere else. And that is why people don't say, I'm booking a home on Airbnb. They say, "I'm booking an Airbnb." It's like Kleenex. It is the category because we created the category. And so suddenly, we have this real -- like real -- like clear-eyed realization. We have an incredibly strong brand. We do not need to be spending as much money on marketing. We have a really unique host. We have to make sure that we're supporting them. But then something else happened, we got really functional. We're able to pivot really, really quickly. And so we're able to massively reduce cost. I sat with Ellie, and Dave, my CFO. We went down line item after line item after line item of expenses, and we became incredibly efficient. And then something else happened. Now it's summer 2020. And all of a sudden, we're thinking it's going to be a multiyear recovery, multiyear recovery, and that's what everyone's saying. Travel is not going to come back for 3 years, 4 years, 5 years. And all of a sudden, it's snaps back for us. And why is this? Because before the pandemic, nearly 80% of our business was cross-border or urban. People weren't traveling to cities. They weren't crossing borders. They weren't traveling for business. But you know what they're doing? After being stuck in the house for months, people are getting in their cars, and they're going a tank of gas away with families and friends, and they're booking giant Airbnbs. So we started noticing that instead of our business being concentrated in cities, it went from cities and nonurban. North America grew quickly. We went from like a lot of young travelers to a lot of families and older travelers adapting it, but something else interesting happened. Because people are stuck at home, they didn't have to go back to an office, people could travel for longer. And so because for the first time, we're living in a world where the vast majority of people don't need to be in office 5 days a week, it means the vast majority of people are untethered. Doesn't mean they can live nomadically like me. I'm literally living nomadically. But families, kids are in school 180 days a year. So that means the other 185 days, you can potentially go away for the summer. And so suddenly, people are more flexible. And that meant the length of stay started increasing. The hotels are great for one-night stays. They're great for conferences. I think if you want everyone to stay in a conference, it's a great use case. And there's going to be more of these. But the longer you're away from home, the more you want to be in a home. And so half our business now is for longer than a week. If you try to stay in a hotel for a week, for most people, that's cost prohibitive. But also, it -- I mean, I don't -- have you ever tried to stay in a hotel for more than a week? It is not -- it gets a little blue.

Yes. I tell you.

And so that's why people love homes. That's why they live in them. And so now half of our business is for a week or longer by nights booked. 1/5 of our business is for a month longer. So all of this is to say, we got simple, we got focused. We got back to what makes Airbnb truly different and unique. And we suddenly had a very adaptable model because we have nearly every type of home and nearly every price point and nearly every geography in the world. And we had all these new use cases. And I think all of this explained why we were able to have this really big comeback and be able to be actually stronger than we were before the crisis began.

That's good color. There's a lot to dig into there. Can we -- let me ask one more on Europe and sort of the macro situation. I know about a month ago at earnings, you talked about how the summer was off to a good start. You talked about in January, the summer -- bookings for the summer were 25% above even '19 levels. Any update there? Ellie's sitting right there. Any update there on what -- and then I think the other thing we're all sort of on data point watch for, are you seeing any changes in behavior from bookings or users in Europe from the current...

In the last 30 days? Or do you mean over the course of the crisis in Europe? Just last 30 days?

Yes, last 30 days, yes.

Yes. So no major changes, nothing to announce. I'm still feeling obviously really good about where our business is. And no major change, obviously, other than the fact that we have paused -- we suspended our operations in Russia and Belarus. And then, of course, Ukraine is not receiving bookings except for essentially humanitarian aid. Other than that, really nothing to announce. And the other thing I'll just say, I mean, just to make another point of this, we're a pretty resilient company. I mean, culturally, we're really resilient. Think about what we've gone through, but we are also a community. Communities are inherently resilient. If you're a hotel and you're in an urban area and you cater to business travel, then you require people to stay in your hotel for business travel. And business travel comes down, and is down, then you're going to be less like resilient.

Yes.

But again, because we -- we are a truly global company in all, I think, 7 continents, including Antarctica. So we're not like a European-based company. We're not an American-based company. We're in all geographies in the world. We're not just vacation rentals, we're vacation rentals plus urban. We're not just budget. I think people know us as budget, but we also have mid-tier, and we have luxury. And we're not just solo people, we're families as well. So we have nearly every type of use case. And we're also short-term stays and long-term stays. So we're not a COVID play. What it actually means is however the world changes, we can adapt. And I actually think we're really well set up for when the world truly reopens because, again, most of our business before the pandemic was cross-border and urban.

Right.

That was our bread and butter. And it will be back, and I'm very confident.

All of the new users and the new people who came to the platform throughout the pandemic and reopening, can you talk to us a little bit about any differences or similarities of what those users are doing versus all the users who joined prepandemic, whether it's frequency of booking, retention of those users. Is there any differences you're seeing in how those people are behaving?

I mean, not too much. I mean, well, there are a lot of differences, but it seems like those differences are because these users joined during a pandemic. And so beyond that, I don't think there's a lot of differences. So again, what's different today than 2 years ago? Today, we have guests not just traveling to 100 cities. We have guests traveling to 100,000 cities.

Right.

In fact, it's a fun fact, Airbnb is one of the most international companies on the Internet. We're in every country in the world but North Korea, Iran, South Sudan, and now Russia and Belarus, and maybe there's 1 or 2 others. I mean, we are truly global. We're in Cuba. And so we're truly a global company. And so people are now traveling in a very distributed way. So that's the first change. The second change is people are staying longer. Before the pandemic, we were, I think, really thought of as a short-term rental company. But there's this huge market of people that want to travel for a week, a month or an entire season. And I don't think anybody can possibly know the size of this market. We can all try to size it, but that would be like you asking me 10 years ago, what's the size of the Airbnb market.

Right.

When people are trying to size the Airbnb market, they were constantly trying to look at the size of the hotel business. And I used to tell people, we're not just competing for the market share of hotels because Airbnb provides an affordable option that allows people to travel that wouldn't have been able before to stay in a hotel. We're on the inspiration business, so we're inspiring people to take more trips. A lot of people use Airbnb, and instead of staying with their friends and family, they stay in Airbnb. I mean, who wants to stay with their family for more than a few days? And then, of course, you now have these longer-term stays. So all these new use cases that are emerging, and what we've seen is people during the pandemic are adopting these new use cases. But I think that's more of a product of the pandemic and how resilient our model is. It's basically the same types of people, and we think they're going to go back to do all the things for the most part they used to, plus these new activities.

Yes. Got it. Let's talk about supply a little bit. You shared some stats on supply, and that -- the high percentage of it that's unique to Airbnb. When you do your analysis of forward demand and forward users, what do you monitor on the supply side? And how do you think about making sure that you have enough supply in the next 2, 3, 5 years to capture all the demand that you hope to bring on the platform?

It's a really good question. So maybe I'll zoom out and just talk about like how we actually get supply and how we think about it, because what we do is we essentially -- I think a lot of people would tend to want to look at a certain market. And they assume we have all this demand, we need to get all the supply.

Right.

Okay? So there's 3 things to know about supply and Airbnb. The first thing is the fastest-growing markets for supply are where the fastest-growing demand is. So where we see surging demand, we see surging supply. This means the network grows itself. Now why is this? Well, actually, if you've ever gotten -- like hailed an Uber, and you've gotten in the backseat of the car, you probably then didn't think, "I'm going to go drive a car myself." Most people don't say that. But the #1 source of hosts in Airbnb are prior guests. So people stay in Airbnb, and they're like, oh, I'll rent a place myself. The other thing that happens is the vast majority of people on Airbnb get a booking within a week. So imagine, you list on Airbnb, and a huge percent of people get up booking just within 3 days. You get like a $400 booking. And because most of our hosts are individuals, they're not businesses, they're like, again, school teachers, they're regular people. If a regular person signs up an app in like 10 minutes and then they, within 3 days, get a $400 booking, they're going to tell their neighbor about it. They're going to tell their friends.

Right.

And so the first thing to say is the network grows itself, which is to say we have 6 million homes. We didn't recruit all those 6 million hosts. They came to us. That's number one. Number two, of course, we're not just going to just wait for the network to grow itself. We want to accelerate the network.

Yes.

And so the first thing we wanted to do with this is increase awareness of hosting. Now we did not -- it was really difficult for many years to market hosting. Our brand is mainstream. It's a noun and a verb. But when we were in the process of trying to work with cities to get all these laws on place and collect and remit taxes, it was not really a good time to be blasting communities. We want to be respectful of cities. Now we have laws in place in nearly every global jurisdiction all over the world. We're one of the largest collectors and remitters of hotel tax. We've collected $4 billion of hotel tax. And so now we're marketing hosting. We did a couple of big ads last year, made possible by hosting. We did another campaign as well. So that's increasing awareness of hosting. And I think what we needed to tell people is the economic empowerment of being able to host. The next thing is when you make it really easy to host. The fewer steps to do something, the more people will do it. And so last year, we really simplified that way to become a host. Next, once you want to list, a lot of people in our community want help. They have questions. Do I have to register? What's it like? How do I prepare for my first guest? And instead of having you call a call center, we connect you to other hosts. So we have a program called Ask a Superhost, where we pair our host with our very best Superhost. And then all these things have helped us accelerate the number of hosts that we have on our platform. We have a number of other things in our future road map, which I can talk about in a little bit. The final thing I'd say is beyond our network growing itself in ways we focus on growing supply, the holy grail is actually pointing demand to where we have supply because there's no one night any time in our history where we've been even close to sold out in Airbnb. We're not sold out. It's just that everyone's going to Boston on the 4th of July or Times Square over New Year's Eve. And so if we can point demand where we have supply, that is actually the equivalent of adding millions more homes. And that's what we've done with this new feature called I'm Flexible. If you go on our homepage, airbnb.com, you'll see this big button. It says, I'm Flexible. And so it works 2 ways. You could say I'm flexible about when to travel. I want to stay for a night, a week or a month any time in the next few months, or you can also say I'm flexible where to go. Over the course of last year, that feature was used 800 million times, and that means that we can now point demand where we have supply. So these are the ways that we're increasing supply in Airbnb. And I think we're going to absolutely be able to recruit the next generation of host and continue to grow for years to come.

It's a good segue totally, I want to ask you about -- you've made a lot of changes and improvements to the platform over the course of the last year, 150 different changes, including I'm Flexible being one of them. Can you just give us some other examples of changes you've made to the platform and how that has impacted either host behavior or guest behavior? And walk us through sort of your vision of how you see bookers using this platform in 3 years versus now and how it all fits together?

Okay. So 2 parts to that question. So I'll give -- so last year, we made 150 upgrades and improvements. There's this theory that like the reason you should do a business unit or a divisional structure is it allows you to move faster and allows you to do more things. And anyone who says that, I would point them to the fact that we did 150 upgrades and improvements over the course of last year. I'm Flexible was one of the biggest things we did. It's one of the biggest changes to travel search since the '90s because suddenly, it's not just fixed search. Where am I going? When am I going? It opens the whole world to a world of possibilities. We did another thing for our hosts last November called AirCover. So we did a bunch of research about why aren't people hosting. And it turns out the #1 fear about people that are prospective host, and it makes sense, is they're worried about something happening to their home. So we ask ourselves, how could we just take this risk off the table? And for 10 years, we were providing this thing called the Airbnb Host Guarantee.

Right.

We're providing $1 million protection against property damage. But most people didn't know about it, and it had some like areas that need to improve. So we rebuilt the program from the ground up. We had $1 million guarantee against property damage. We had $1 million personal liability coverage, plus pet damage protection, deep cleaning protection. We packaged this whole thing to this new product that we call AirCover, which is end-to-end protection only on Airbnb. And so only Airbnb gives people AirCover. And the NPS for this product is incredibly high. So even if something happens to your home, in the rare event it does, our team is there to be able to help you. And I think this allows you to feel like if I'm a person, I really care about my home, this is the platform to list on because this is the place where I'm going to get the most protection. No one else even comes close. So that's just an example. But what will people -- what would it look like in 3 to 5 years? I mean, it's pretty clear to me. In the mid-'90s, Expedia was launched. And around that time, there was what we now know as the kind of really basic travel paradigm. And the travel paradigm is a search box, and the search box is like a fill in the blank. So Airbnb, I'll give you an example, we're at 100,000 cities, 100,000. Most people can't even name 100 places.

Right.

And so when you have a search box, you are stuck. And so what do you do? You just type in Paris because of Emily in Paris or like whatever TV show you saw on Netflix. Like let's go to Rome. Let's go to Vegas. Let's go to Miami. Or you have a business meeting, and so you type in a location. And then it says, check in. Okay, I'm going to go like March 10 to March 20 checkout. And this is a very limited way of traveling because business travel a while back, I think this is an example, is never coming back to the way it was because of Zoom. I always believed that Zoom is here to stay, to believe that some business travel is replaced. And the more people working from home, I think the more they're going to like get out of their home. And so I think there's going to be a mix shift from business travel to leisure travel. And when people are traveling for leisure, they don't have to go anywhere per se, unless they really want to go to Cape Cod. They don't have to.

Right.

And there's now a world of possibilities. And because people are flexible and they only need to be in the work 3 days a week or at manager discretion, and I guarantee you, fewer people come in 3 days a week over the summer, then suddenly, it opens a world of possibilities. The moment we can retrain the customer to not come to Airbnb thinking they have to know where they're going, but come to Airbnb with a world of possibilities, then suddenly, it opens the entire world. Now we're in the inspiration business. Now the home is a destination. Now we can point demand to where we have supply. Now we can inspire other services. That's how you get top of the funnel. That's the way we've done it. We used to think the way to get top of the funnel is to have flights in our product. That's not how to do it. I mean, you can still add flights, but I think the way to be top of funnel is breaking the search paradigm. That's the key.

Interesting. Okay. That's a really interesting realization of the flight versus the search paradigm because I remember we talked about flights in the past. Okay. So you mentioned before that you are living somewhat nomadically now. So you're using the platform a lot. I love to talk about -- explain to us how you're using the platform now as you're deciding where to live, how your process works living nomadically? And then I'm sure you run into points of friction where you say, I wish this was better or you get feedback from host or guests saying, "Can you help us with this?" One, walk us through what you're up to right now. And then what are those key points of friction on either the host or the guest side you really want to try to fix this year and next year?

Yes. So I -- having spent like 2 years in my house, like most of you probably working from home, and I live alone. I have now a golden retriever puppy named Sophie. I just felt like I want to get out of the house. And I thought to myself at the beginning of the year, people are living -- a lot of people are living all over the world on Airbnb. And I realize, I can kind of live anywhere as well because I just need to go somewhere with Internet connection. And so at the beginning of the year, I went on Twitter, and I announced that I'm now, just like hundreds of thousands of other people, going to just live on Airbnb. And so I started my journey in Atlanta. I went to like Charleston, Nashville, Miami, Colorado, L.A. And it's been really a great experience. I always believe that people who build great products build products for themselves. And when you're a founder, you tend to be more product-oriented. It's all about innovation. You're not just running a company in the laboratory. You have to get out of the office. You have to get in the field. You have to know what the numbers mean. You have to be the chief customer evangelist for the brand. And so I started using Airbnb. And the first observation I had is, wow, like I can feel those 150 improvements. It's a lot smoother. And then the second observation I had is, ooh, this isn't right, and then that's not right. And so I started realizing like, oh, the WiFi code is not as accessible. And so I've really tried to make comments and notes everywhere I go. But this isn't the way we improve our product. The most important thing is I need a model behavior. I need a model behavior, and all 5,000 people in the company need to see that the CEO is using the product. We all need to be using the product. And so this is like the ultimate in [indiscernible], truly living on Airbnb. And you get to have some pretty crazy, weird adventures. Like I stayed in this house in L.A. in Topanga Canyon. And it said fairytale cottage in the title. I should have known better. I missed the princess part of the title. It was a princess fairytale cottage. And so I get to the house, it's a really nice cottage at Topanga Canyon. I walk in, it's all pink. I walk in the bedroom, it's a princess bedroom, a princess-themed bedroom. It's like, basically, if a little girl wants to have a dream to be a princess for the day, that's where I was. I go to the bathroom to shower, and there was a little tiny pink bathtub that would look more like a foot bath.

Yes.

And so that's how I -- but the backyard was amazing. There were pigs in the backyard and a tree house. My dog loved it. And so, I mean, I'm just trying to think like, can you imagine a hotel having experience like that? I think the point is that like not everyone wants a fairytale princess cottage, but you can find anything on Airbnb because every home is as unique as every single person. And we're like a one-of-a-kind product at the biggest scale you've ever seen. And so it's just -- that's the other thing. It's just to build the experience of the product. Now as far as feedback or like kind of ways we can improve the service, I'm not going to give away too much. But one thing I'll just say is we are looking at how can we provide the very best customer service and like satisfaction guarantee in the world of anyone in travel. This is something we're obsessed over. I think that most Internet companies treat customer service kind of like a back-office function. But I think like -- think about it like we're competing with the front desk.

Right.

And so I think that the Achilles heel of Amazon in the early 2000s was shipping, right? They had the most selection at the lowest prices, but they were competing with walking in the store and taking something out. And so they felt, I'm sure, that if they could somehow take a weakness and make it a strength, suddenly, they have all these other strengths against retail. Well, Airbnb, a similar analogy. We are more affordable than a hotel. You can usually get twice the amount of space for half the cost or vice versa. The homes are much more equipped. You go to a hotel, and most of them don't have a kitchen. We have kitchens, we have barbecues. And the homes are fully equipped. You can live in them. That's why they're homes. You can feel like your neighborhood. You have a host, not a front desk, who make sure the experience is great for you. So these are all the reasons it's great, but there's been one problem. And the problem is it's not as consistent of an experience. And the question is, what if we can make the experience of Airbnb even more consistent? And that's what we're focused on. And I don't -- I can't give away too much except to say that in the coming months, I think you'll see some pretty cool stuff.

Is this what you mean when you talked about recently becoming the ultimate host of the community?

Yes. I mean, there's different ways to talk about this. Like I'm a designer. I'm pretty different than most other travel CEOs.

Yes.

Most travel CEOs come from finance or operations. I come from product design. And one of the greatest designers of the 20th century was a designer, a couple named Charles and Ray Eames. And Charles Eames, he's a very famous designer. You've probably seen all of his work. He basically invented the like laminate plywood chairs that everyone sits in. And he said, the role of a designer is that of a very thoughtful host that is constantly anticipating the needs of their guests. I ultimately believe that it's really simple. If you ask people, if you had all the money in the world, what would you do? Well, we actually commissioned the survey years ago. And if you commission it today, I guarantee you, the #1 answer will be, I would travel. Travel is incredibly aspirational. When we get married, we travel. When we retire, we travel. We graduate, we travel, all these incredible experiences. And so why do we sell it like it's a casino product?

It's a good point.

Like why don't we provide more inspiration? Why don't we treat travel as what it is, an incredibly fun, exciting thing. And so we've always believed that the very best experience will win in this category every step of the way because people are in the business of having an experience.

If we look at your -- some of your oldest markets like the U.S. and Europe, and you sort of you're watching user behavior, like you mentioned, how has the demographics or the age of your users, how has it changed pre-pandemic, post-pandemic? And where do you still see the most runway of the different demographics of people to get them on the platform, older, younger, certain income? Like who's not on the platform? You say this is a greenfield we have to go after.

I mean, it's pretty much everywhere. I mean, when Airbnb started, it was primarily like young people. I was 26 when I started the company. I feel like I started the company for other 26-year-olds like me that were totally broke, couldn't afford to travel. And that's how it started. It was really like a budget way to travel. But something happened. Kids told their parents about it, and then their parents started using it. And so when we started spreading by generation. And then Americans told -- like would travel the Europe, bring the concept with them. And so the whole thing worked like a global network that spread between generation and between price points. It's very interesting. When parents joined Facebook, all the kids fled, right? Like no kids want to be on the same social media platform as their parents. But Airbnb is like the one app where it's cool for kids to be with other people's parents. You actually stay -- like the traveler stay with a host. The host could be -- they're old enough to be their parent. I think they're like proxy children some of the times. It's kind of -- they're just taking care of -- so there's a really interesting dynamic. But as far as the demographic, it has not really changed very much over the course of the pandemic. What's changed is the reason people are traveling. So before the pandemic, it was more urban, it was more cross-border. It was a little more business travel. It was shorter stays. Now the stays are longer. They're less -- I wouldn't even say they're less urban, they're everywhere, and they're much bigger groups. So obviously, there's groups of 3, 4, 5, 6 people. As far as greenfield, I mean, every single thing is greenfield in the sense that anyone in the world that is staying in a hotel could stay in an Airbnb. There's very few circumstances that we don't serve. If you arrive at midnight and you're leaving at 8:00 a.m., maybe you should stay in a hotel. If you all want to be in the same conference place and you want to like be a floor above the ballroom, a hotel is really good. Other than that, though, I think Airbnb is a very compelling option for every type of use case. And again, our market is not limited to short-term stays. Most hotels are 2-, 3-night stays.

Right.

There is this entire world opening of stays that are 1 week, 2 weeks, a month, 2 months, 3 months. So I think that our most mature markets are some of our fastest-growing markets. And so that tells you that we're not even close to being saturated, even in our most developed markets like North America. That's...

Yes. I think you probably just answered my next question. One of the bare cases that I hear from investors, some cynics would say, well, Airbnb, they benefited from the pandemic. You brought on a lot of new people, exposed them to alternative accommodations. But then as the world reopens, the hotels will get more competitive. And there's going to be a large group of people who are going to say, "You know what? I want to go back to a hotel, where they're going to -- I've got a gym, I'm going to get room service, I'm going to be pampered that way, and I won't stick on Airbnb." It doesn't seem like you're seeing that at all. Any other rebuttal you would have to that cynic who says that?

I would say a couple of things. The first thing I would want to say is just remember how large the travel market is. It's about the size of the entire market for oil. People have sized it between $2 trillion and $6 trillion, depends on how you size it, like oil cumulative values around that size as well. And so when we started Airbnb, I think there were all these fears like Airbnb is going to kill hotels or take market share from hotels. You know what's interesting? Over 10 years as we grew, they had record sales and record profits. And I think what people missed was that, number one, the market for travel was so big that no one company or even industry could serve all of it. And number two, we created a whole new category. Hotels are really catered to business travel, not exclusively, but primarily. That's where the vast majority of the profit is. And not only that, but as you know, a lot of people rack up points when they travel for business and they use it for leisure travel. So it's kind of like the subsidy thing. Well, I will say that for anyone that thinks that business travel is coming back to the way it was, I'd ask, how many CFOs want to pay as much on travel entertainment in next year as they did before the pandemic?

Not many.

I think a lot likes this money they're saving.

Yes.

People will still come to meetings. Human connection is important. But I don't think people are going to get on a plane for a 1-hour meeting, unless it's like some make-or-break deal.

Right.

And so Zoom is going to replace quite a lot of things, and we did a whole IPO on Zoom. There's a lot you can do. And so business travel will be back. It's just not coming back the way it was because the world is not going to look the way it was. As long as you believe Zoom is here to stay, as long as you believe that people will have incremental flexibility, that they aren't going back to the office 5 days a week, then you're already saying the world has changed. And if the world changed, then travel has changed. And people have permanent flexibility, people are staying longer. Every single trend that we've seen is going to stick because all of the underlying principles are here to stay. There's a lot more flexibility. But remember, once borders reopen, that's our bread and butter. The whole idea of Airbnb was to be able to go to another country and be able to exchange culture. I mean, that is what this whole Ukrainian thing shows us. And so when that reopens, I think it's going to be another demonstration that our business is inherently adaptable. This is the very beginning of something huge. More than half of our business longer than a week the hotels can't serve. Hotels are going to do great because they're going to still be able to cater the business travel that remains and the conferences. And finally, for us to win, nobody has to lose. This is a market that is the size of oil.

Yes. That's great. It's a good rebuttal. The -- you mentioned loyalty and all the loyalty points that everyone -- that business travelers accumulate, leisure travelers accumulate. Even your OTA friends now are pushing more into loyalty program, et cetera. How do you think about Airbnb in a loyalty program or a subscription program? Like how do you think about that philosophically?

Well, I mean, first of all, we're pretty lucky because, number one, we have a brand that is ubiquitous. So it means we don't have to buy the customer. They come to us for free. The other thing is they come back to us. They're very loyal. We don't have to create a loyalty program where we're subsidizing like buy 10 nights, get 11th night free or something. And so the first point I'd say is we don't need a loyalty program. We don't need to buy customers. We don't need to subsidize people onto our platform. We already have a loyalty program that's called Airbnb. It's very loyal. At the same time, we were looking at a variety of ways to reward people for using the service more. And we were actually working on something before the pandemic. We decided to pause it. And so what I've decided is to adopt the kind of Jeff Bezos framework of perishability. Jeff Bezos said that -- it reminds me of something a teacher said to me when I was in college. He said, "Brian, you can do everything you want in your life. You just can't do them all at the same time." And so one of the lessons I learned in the crisis was you can't do everything at once. This is my journey. When you're 26, my parents are social workers. And all of a sudden, you have an idea, and that idea, like that starts in your living room. Within the years, hundreds of millions of people use it, and you have access to billions of dollars of capital. And it comes pretty easy. I wouldn't say it was really easy, but like it happened in a matter of years. And you do convince yourself, I can now do that 10 more times. And how many entrepreneurs try to do 10 things at once, and it doesn't work. And so one of the lessons I learned was you kind of focus, and you have ruthless prioritization. And you don't just do all these aimless big bets to have a 1% chance of working. You put the entire weight of the company behind a few large bets, and you nearly guarantee they're going to work. What this means is that you have to have ruthless prioritization, and so how do you prioritize? We prioritize based on the things that are most perishable. A loyalty program, we can do next year, 5 years from now or 10 years from now, just like we can add sponsor listings next year, 5 years or 10 years from now. These are not perishable opportunities, and they all exist. The perishable opportunity is that travel has gone through the biggest change since World War II. And so we want to focus on gaining as much market share as possible. And so a loyalty program wouldn't be the first thing I would do to gain as much market share as possible. So everything is on the table, but we are totally focused on this travel rebound that's unlike anything we've seen since probably the second World War.

Okay. Let me go after that perishability and prioritization a little bit. I know you asked this question a lot about take rates and the way you sort of think about adjustments to take rates over time, whether through promoted listings or other adjustments. Where is that and sort of how you -- when you prioritize and what you hope to accomplish in the next couple of years, where are take rate adjustments and monetization levers?

I mean, take rates are probably one of the -- like -- well, I mean, let's zoom out. Before the pandemic, I think our like EBITDA margins were like minus 5%. And I think when we were on the road show, I think we said that we will one day get to 30-plus percent EBITDA margins. And 2 years later, we're at 27%. And I don't overpromise. We -- there's a lot of -- it's going to be -- you can't make that progress every year. We had a lot of the [indiscernible].

[indiscernible] actually.

At the same time, we've gotten really, really disciplined. And we -- there are a lot of opportunities to increase take rate. So some of the ways we could do that. The primary way would be to add more services for a host and charge for those. So for example, Amazon, Alibaba, eBay, Shopify, Etsy, all of them have done numerous things to be able to sell services to sellers to be able to increase the take rate on the seller side. And we've given away so many things for free, like AirCover. I mean, we give away AirCover for free, $1 million protection against property damage and personal liability. And so our principle is we always want to give away more than we're charging. So we have opportunities to charge for more services for host or a guest. But every single year, we're going to make sure it's a better value to list or to book on Airbnb than the year before. So if we're -- if we ship 3 things, we'll charge for one of them. And so that's like the kind of simple, that's not official ratio, but that's just kind of the mental model as there's a lot of opportunities on the host side. And then there's a lot of opportunities on the guest side as well. Obviously, once you're a brand like Airbnb where people come to you direct before they have a destination in mind, then suddenly, if you're top of the funnel, you can theoretically sell them anything. So again, it's about being ruthlessly focused and prioritizing the most perishable opportunities. But there are a lot of opportunities going forward. But again, the bigger we get, the more we become an ecosystem. So the name of the game is get as big as possible, try to capture as much potential market share as possible. That allows us to be an ecosystem. Once we're an ecosystem, there's a lot of different services we can offer. And my evidence of this is think about how many companies are built off of Airbnb. There are hundreds, maybe thousands of companies that do key exchange, pricing, they handle messaging, they clean apartments. There already is an ecosystem on Airbnb.

Yes. That's a -- it's actually -- it's an interesting segue into another question I had for you around you mentioned getting as big as possible and bringing more people to the platform. In the last month or so, we've learned that at least one of the OTAs appears to be spending more on paid search to bring more users on and get bigger basically. Just talk to us sort of philosophically how you think about paid search spend and overall marketing spend on the platform in the next couple of years just to ensure that you're capturing as many people and sources of behavior as you can?

Yes. I think that we have a very different philosophy about marketing than the OTAs and other people in travel. And so I'll share how I think about marketing. Number one, marketing isn't even how we built our brand, for the most part. In fact, the way we built our brand is mainly press and word of mouth. I mean, we get 0.5 million articles a year on Airbnb. We've had tens of thousands of articles just in the last week alone. And we are constantly in the news. And the vast majority of people come to Airbnb because they heard about it from a friend or family member or because they read of Airbnb or because it was on social. So the first thing we want to do is make sure that we're constantly in news and we have a lot of press and people are constantly talking about it and we have a huge share of the voice of the industry.

Yes.

The next thing we want to do is make sure we actually create something unique and different. The reason why we are a brand that's ubiquitous isn't because we spend a lot of money on marketing. And you can't buy ubiquitous mind share. You can't do that. People have to want it. You have to -- you can't buy their hearts. They have to actually love you. And so we focus on trying to make our product as unique and different as possible. That's why we're a noun and verb, not because we're good at branding. Now when we think about marketing, we don't think of marketing as a way to buy customers. We think about marketing as education. I think of marketing as educating. We're educating people about what makes Airbnb unique and different. And that's why last year, we did the first large-scale global marketing campaign we did in 5 years. And going forward, most of our marketing, we're not going to be marketing the brand. They're not going to turn on a TV and see an Airbnb ad. I would like it to be more like Apple, where we're marketing products. So we launch a new feature, and you see an ad about the feature. That's new. But you can only market new products if you make new products. You have to have an innovative culture. And so that is how we're starting to think about it. And then for us, performance marketing is a laser, to laser in on balancing supply and demand. So performance marketing isn't per se a way to like buy customers because that is a linear proposition that gets very expensive. It's a way to make sure the marketplace is always in balance.

Makes sense. Marketing product, it's a really unique strategy actually in travel and everyone else is really doing that.

And I mean the evidence of that is 90% of our traffic still is unpaid or direct. And that is consistent, and it will continue to be consistent.

You talked earlier about how much more efficient and focused you became throughout the pandemic. And we've seen it in the results. I think you guys have beaten my EBITDA margins every quarter post-IPO. So for me at least, you beat me. Maybe as you sort of look at the way the business is operating now, are there still areas of improvements around efficiency that you see, and give us some examples of the various reasons, this is where we can really become even more efficient than we've even been the last couple of years?

I mean, top to bottom down the P&L, right? So if you think about our P&L, we have merchant fees, we have servers, we have customer service, we have marketing and then we have essentially our fixed cost, and then we have our take rate. So that's our business. Our goal is to have metronomic improvement every single quarter. Now I think the last 2 years has been probably more the metronomic improvement. But it is going to be a little bit asymptotic. You can't just add 5% EBITDA margins every year forever. So starting with merchant fees. The more -- a lot of guests become host. A lot of hosts book on Airbnb. So as you can imagine, we built our own homegrown payment system. We built a payment system that was built 14 years ago before Stripe existed, before -- we were actually one of the first sites on the Internet where you could pay somebody. Like eBay, which predated us, and Etsy, which predated us, they -- I remember this in 2008, you had to go to paypal.com to pay. You couldn't do it through the checkout process. And so there's a number of ways, number one, where we can have metronomic improvement in the merchant fees. AWS cloud services, we've been metronomic improvement and becoming more efficient. We hired one of the -- I think, one of the best technology leaders in the world, Ari Balogh. He was CTO of VeriSign Yahoo!, and then he had led the search infrastructure at Google. So he's made a lot of improvements there. Customer service, once again, we have metronomic improvements. The #1 way to like save money on customer service is not to be more efficient in answering phone calls. It's to eliminate the reason people are calling you in the first place.

Right.

And to eliminate the way people are calling you in the first place, you need really good quality control. And that's one of the things we do a lot. Marketing, we're going to probably -- we don't intend to spend more money as a percent of revenue on marketing. And I would hope every year, we get bigger and bigger, we get even more efficient on marketing. And that leaves our fixed expenses. And as you've seen, we still have, outside of call centers in corporate headquarters, only have 4,800 employees, right? And before the pandemic, we had 7,000. And we are only hiring -- we're not hiring -- we're hiring hundreds of people this year, not thousands of people incrementally this year. So the company is getting more efficient. And all of this is before you saw the ADRs go up. Why do our ADRs go up? Mostly not inflation, or at least partly not. It was mix shift. People booking bigger homes and then you've got all the take rate. So we're not going to turn anything from 0 to 100. Every single area is going to make metronomic improvement every quarter. And then there might be areas we invest a little bit more in, like AirCover. We invested a little of that savings back into the customer to make the product even better than any competitive product. And then people love the service, and then they come back for free. You don't have to buy them. So you save money on marketing.

Are there -- that's helpful. Are there still tools you can give to hosts to help them better understand pricing and competitive dynamics?

Oh, totally.

I would sort of think through -- there's always a lot of discussion about what happens with ADRs, what happens with the pricing, will host lower prices, raise prices? Maybe give us some examples of what are the tools you're giving to hosts now from that perspective to help them understand how do I price? And how do you see that evolving?

Yes. I mean, so we have -- maybe just to back up, most OTAs and most other platforms, including, I mean, even Amazon, like most of the people who sell stuff on Amazon existed before Amazon, right? Like most of these people build product. The thing that's different about -- and most hotels existed before the OTAs, right? The thing that's different about Airbnb is that most of our hosts weren't hosting before Airbnb. So we had to obviously build everything for them. We couldn't leverage some existing industry. We couldn't just be a distribution channel. So we're more than a distribution channel. We have to build all the tools. So we need to build a unique calendar. We need to build a pricing algorithm. So what we do is we take millions or probably significantly more than millions of data points about properties in your area. We can look at the demand curve, and then we can essentially predict what your place will be worth per night, and we can give you a pricing recommendation. This is -- these are really, really important tools. So we have that tool. We have really advanced availability tools. We have a direct line to -- so basically, we have 800,000 Superhosts, I think, at last count, probably even more now. These are our top 20% of our hosts. We have custom-built tools just for them, including a direct line to a dedicated support line to provide premium customer service. So we're continually investing in these tools, and they're going to continue to get better.

Yes. As a husband of a Superhost, the service is very good. My wife is very happy with the customer service.

Oh, yes?

Yes.

Yes, yes. We definitely -- and that's another difference is a lot of hosts -- I always say, in Airbnb, money is the hook. But like money is not the primary reason people keep using Airbnb. I mean, one of the reasons Superhosts continue to host is because they're Superhosts.

Right.

They love the honor. People want to be good at something. And when you're a Superhost, it means you're a good host. People have that sense of pride. And I think it's -- that makes it more than just about money. And that allows us to invest more in them because we know they're the highest value host. And so it allows us to continue to invest more and more in them, and it incentivizes better and better behavior.

I'm going to have her keep an eye out for you in case you...

Yes, you don't want to [indiscernible]. Yes, you don't know.

[indiscernible] right, I've disclosed that.

Exactly. And the other thing people don't realize about Airbnb is like if you were to like take out your phone and download an app in the App Store, what's the percent likelihood that you're going to leave a review for the app? If you go and you buy something on Amazon, what's the percent chance that you're going to leave a review for that product? 70% of guests who book an Airbnb leave a review at the end of the stay, 70%. And these are like paragraphs. So what it tells me is that the community is built on a system of trust and that hundreds of millions of people are constantly reinvesting through their time onto that system of trust. What it means is the platform gets stronger and higher quality every single year. So it's like a flywheel that accumulates. So the story of Airbnb was a story of a company that was a little misunderstood, kind of inefficient. We need to build everything ourselves, do a lot of thankless work. But then eventually, it went from like pushing a rock up a hill to now, it's kind of a little bit easier going down the hill. And I think that inflection point was the pandemic.

Yes. Last one I had for you was on Experiences. This has sort of been one of the products where depending on the year or the time, it seems like there's been a larger push or a smaller push around Experiences. So what have you learned about challenges or opportunities with Experiences? And how do you think about that evolving? And what do you have to do to sort of scale that on the platform?

Yes. I mean, so when Airbnb grew, I used to say we monetize your biggest asset, which is your house. But it actually turns out your biggest asset isn't your house, it's your time. And I think Experiences is an idea that we actually found from the community. A lot of hosts were saying, hey, come like stay in my house, and I'll also take you out to do X, Y and Z. And so in 2016, we launched Experiences. These are 2-, 3-hour activities hosted by locals. And I thought, in 2020, Experiences would be the breakout product for us. And instead, the pandemic occurred, everyone was sheltering in place, and we had to put the product in pause.

Right.

Now that the world's reopening, I think the world is going to be ripe for Experiences. And the reason why is you can only stay home and watch Netflix so many nights in a row. Eventually, you've watched everything. And you can download the other apps, you can watch everything on those apps.

Yes.

And eventually, you have to get out of house. 1 in 3 people used to meet their significant other at work. How do you do that in a world with Zoom? And so I think the biggest point I'm going to make is that I think long after this pandemic is over, we're going to be living in a much more pernicious epidemic. And that's an epidemic of loneliness, and people are already lonely before the pandemic. It was a desperate time. And think about how isolated people all over the world are. And they can't go to malls, fewer people go to churches, fewer people go to offices. And so how do people meet people in the future? And what do you do other than going to restaurants to go out? There's fewer bars around even. And so I think there's going to be a niche for Experiences for people when they're traveling. And if you go to Paris, you go to Eiffel Tower. But if you stay in like an A-frame home in upstate New York, there's no Eiffel Tower. What do you do? Well, you can do micro brewing. So the point is Experiences is going to exist in 100,000 cities where you can't build landmarks. And people can even do them in their own city, and the reason they do an Experience is to meet other people. It's a great way to meet people. And how else can you meet people these days? So I'm very bullish on Experiences. And I think you're going to see it in the coming years. Probably next year, it will be a much bigger push. I don't think the first thing people do when they travel want to meet strangers. They'll have to get used to seeing their family and their friends.

Right.

But probably in the coming years, it's going to be a huge product, and people love experiences on Airbnb more than homes. A larger percent of Experiences get 5-star reviews than homes. So this is a product people love. We're just waiting to market it.

Great. Brian, it's very exciting. Can't wait to watch it continue to evolve. Thanks for the time.

Thank you very much. Thanks, everyone.

Thank you. That was good.