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

All right. I think we're going to get going with our next fireside chat. I know some people are still filling in seats, and we're going to be pretty crowded in here because we've got really exciting next one on the fireside chat side, Brian Chesky, the owner and CEO of Airbnb. Brian, thanks so much for being part of the conference this year.

Well, thank you very much. It's always good to speak of everybody [ here ] in a hotel.

So I want to level set maybe with a big-picture question first, and then we'll get into some of the more nuances around the business. Obviously, it's been a fascinating couple of years for you. You're running a business. The pandemic happens. You've got to make a lot of choices around opportunities and challenges you were facing over the last couple of years, and here we are now a couple of years later. So before we get into the future of Airbnb, maybe you could just take a step back and sort of walk us through some of what you were going through over the last couple of years and how you navigated through that?

Yes. Well, thank you all for joining today. I am -- I'm 41 years old, but after the last 2.5 years, I feel like I'm 41, going on 50 or 60 years old. I'll just take you all back and do a really quick story of what happened. January 2020, I come back from the holidays, probably like most of you, thinking your life was going to look a little like the last year, not realizing that probably the biggest disruption in travel since World War II was about to happen. We started noticing our business started dropping because we actually have a business in China. And all of a sudden, our business in China dropped by like 80%. And I make some -- now quite naive comment. I say, "Wow, if this thing spread beyond China, this could be really bad." And of course, then it started spreading throughout the rest of Asia, then Europe and North America, and all of a sudden, our business drops by 80% in 8 weeks. And that's like going on a 18-wheeler, you're going 80 miles an hour and then you slam on the brakes. Nothing good happens. There's no real graceful way to land a business going that big, dropping 80%. And at that moment, we called an emergency Board meeting. And at the end of the Board meeting, one of my Board members is a Board member named Ken Chenault. He was on the Board of -- he was the CEO of American Express for, I think, about 18 years. Notably on the Board of American Express -- CEO, American Express during 9/11 and 2008. And he said, this is probably going to be like 10x the impact on travel as 9/11. This is your defining moment as a CEO. And that really rung in my head. And I said, if this is our defining moment, what are we going to do? And I wrote out a series of principles. And the first thing I said is we need to preserve as much cash as possible. The second thing we need to do is we need to act as decisive as possibly. The third thing we need to do is we need to act with all stakeholders in mind. And then finally, we need to play not just for survival, but we need to be playing to win the next travel season. We always got to keep our eye on the prize. And so we basically just reconstructed our business. We -- I'll kind of skip through all that, but we basically simplify the company. We have like 10 different divisions. We went to a functional organization. We cut out a huge amount of cost. We did the experiment that every CMO in the United States wish to do. What happens if you turn off all your marketing? You know what happened? Almost nothing. Google did not want anyone to know this, but our traffic came back to more than 90% of what it was after we turned off all of our marketing. And we learned a couple of things. The first thing we learned is our brand is incredibly strong. The second thing we learned is that our model is incredibly adaptable because when cross-border travel got shut down, when people stop traveling to cities, they got -- they were stuck in their home, and they were like -- people were like, we want to get out of our house. So they started traveling nearby basically a tank a gas, call it, 200 miles away, and they started booking these entire homes, Airbnbs for weeks, even months at a time. And then suddenly, we had this whole new business where half of our business by night's book was longer than a week, [ 1/5 ] of our business longer than a month. We got really back to our roots, and the team really rose to the occasion. And just to kind of kind of put a bow on all of it, when we were going public, we had forecasted that one day we have EBITDA margins of 30-plus percent. At that time, we were like, "Oh, the other unicorns," unicorn by market cap and not unicorn by cash flow. So we were basically breakeven. And fast forward, only 2 years later, we've now done about $3 billion of trailing free cash flow. And I think the lesson here is that what doesn't kill you can make you stronger. I remember an old [ Andy ] growth quote, "bad company is destroyed by a crisis, good company survive a crisis, but a great company is defined by a crisis," and we always wanted to be that third bucket, and that's kind of where we are today, hopefully, better for what happened to us in all the adversity.

Okay. Well, I want to get into a lot of the big-picture thematic elements of the company and what you're building, but maybe just stick with this theme. So we just had a very strong travel season through the summer of 2022. I think the number one question I get from investors, and I think it's pretty top of mind, is what does travel look like after the post-pandemic recovery? From your vantage point, you're seeing changed consumer habits, you're seeing elements of demand, supply and elements of possibly a more macroeconomic volatility that we're living with. What do you see looking out, not just the rest of '22, but how you see travel evolving beyond this year?

It's a great question. There's a -- I think there's a debate in the travel industry. Is the world going to go back to the way it was before the pandemic for travel? Or is it fundamentally changed forever? And I'm of the opinion that we're not going back to 2019 anymore when we're going back to 1950. We're not. The world has changed. All you have to believe is that Zoom is here to stay. If you believe Zoom is here to stay, then you believe that there's permanent flexibility that people that have jobs on laptops aren't going back to the office 5 days a week. And if they're not going back to the office 5 days a week and many people are living remotely, then we're now living a world of newfound flexibility. Business travel is going to come back. It's starting to come back, but business travel is never going to be the way it was before. And the reason why is the bar to go on an airplane for a meeting is now higher when there's Zoom. And when people do get on an airplane, I think they're going to want to travel and stay longer. Now what you are going to see is a lot more gathering, a lot more conferences because the more people work remotely, the more isolated they are, the more they want to gather. They're going to gather for family reunions, for anniversaries or business travel meeting. So what I think is going to happen is, number one, before the pandemic, travel was dominated by the top 100 cities in the world. I think people were going to Vegas and Miami and Paris, and they're still going to go to those cities. But now, they're going to 100,000 cities. People are discovering lots more places. And the reason why is when you're flexible in traveling, living starts to [ blur ] together, and you start to travel and [ stay in ] places longer, you're not really maybe as interested in staying in a cramp little hotel, you want a place with more space. And so you're more open to staying in different places. The second thing about travel, I think, is that stays are getting longer. There used to be this world where you would travel -- if you have this gap in your life, which we call vacation, where you're not working or you have a 1- or 2-day business trip. And I think there's now a category in between of people with flexibility, and they're going for weeks at places, and they're kind of on vacation or maybe they're kind of working, or they're working remotely. So this is going to be a really big bucket and a really big opportunity. But all of the travel that -- a lot of the travel we had before the pandemic was cross-border, urban. That is also now coming back. So I guess I would summarize by saying, the world is never going back to the way it was in 2019. If you believe Zoom is here to stay, flexibility is here to stay, business travel is fundamentally altered. It's much more now about longer stays and group gatherings, and travel and living are blurring together. This is an entirely new world. It's exciting for travel because I think one of the things that people yearn for are things that were taken away from them. And during the pandemic, travel was taking away from people, and I think they want to travel more now than ever before.

So you built sort of a company that has a lot of direct traffic and app that sits on a lot of phones. In this new world order, how do you think about taking advantage or optimizing for that activity level? And what you want to build inside the app that could feed back into the consumer habit you've talked about?

And you mean this new world like this -- the world of applications or just like the shift to mobile?

The shift to mobile, but also the shift to the way the consumer spends their time and they [ spend ] their money. And how it feeds back to your platform, and what you want to build against it?

Well, I mean there's a lot of places to take this question, but like -- it's kind of interesting the way travel has been marketed historically. If you ask people if you have all the money in the world, what would you do? The most common answer is people will travel. That's what we do after we get married, after what we do when we graduate, it's after what we do when we retire. And so if travel is so aspirational, then why is it sold like a casino? And I really feel like, first of all, the positioning for travel to get back to that kind of golden age, it could be much more about something that is not just about direct like performance marketing, but it could be supplemented with like the reason people are traveling in the first place. And so what we've decided to do is we have a very different approach to marketing. Let's start with marketing. We have a full-funnel integrated approach to marketing that combines performance marketing with also brand marketing and PR. And actually, the way we built our brand is mostly PR, word of mouth and people talking about Airbnb. We have about 0.5 million articles written about Airbnb every year, like about [ 500,000 ] last year. And Airbnb is now a [indiscernible] all over the world. It's kind of like [ Cleanex ]. And the reason why is because they're [ maybe ] kind of popularized new category of travel. And so our general approach is not to try to buy customers. Our general approach is to make something that's unique and different. If you make something unique and different, you'll have essentially created a new category. If you create a new category, people will talk about it, you'll be more likely to be a noun or a verb used all over the world. I leverage a lot of press interviews. I do probably a lot more interviews than a lot of our CEOs because I think it's been really helpful for us to tell our story. And then we think of marketing as education, not as a way to buy customers but to educate people about our product and how it's new, unique and different. And so that's really how we approach it. And then what we're now doing is making lots of investments into our core application, as you say. I'll just call out two things. Over the past year, last May, we launched Airbnb Categories. And we also launched AirCover for guests. These are 2 major new products that really change the game for our business.

So when you look at innovation like that on the guest side of the equation, what do you think that means for either the economics of the platform you're building? Is it better retention? Is it better conversion? Is it more utility going back to the consumer? How can we track innovation that's aimed towards guest? And what it means for growth or margin structure over the long term for the company?

That's a great question. So let's talk about the 2 products that we launched and why we launched them, what we're trying to do. So the first thing we noticed is that since the mid-'90s, travel search hasn't changed, right? Like if you go to most travel websites, there's a big box, it's search box. And it asks you a question, and the question is where are you going? And to the first problem, you have to know where you're going, which before the pandemic, most people knew where they're traveling to. But what we noticed is something had changed. In this world where people have more flexibility, not everyone has to be back in the office, a large percent of guests have some flexibility. In fact, most of our guests are flexible on the location or on a date when they're traveling. And so this really fixed way of searching was a very, we felt like, limited way to see the world. And so we thought what if we categorized our homes, not just by location, which is the most travel companies do, they categorize things by location. And then it limits you to type of place you can think of in a search box. And so everyone is typing in Paris and Rome and Vegas and Miami, and we wonder why everyone goes to same places, well, because it's a search box. It's like a fill-in-the-blank question. And so we thought if we categorize homes, what makes them most unique, we can then do something really important, which is highlight the most unique Airbnbs in the world. We have like tree houses in Aptos, California. Most people wouldn't think they type in Aptos, but they would look to things to look through tree house. So the first thing we wanted to do was highlight the most unique properties on Airbnb. But the second thing we wanted to do, and this is a bit of the holy grail of supply and demand, is not just add supply but point demand to where we have supply. You see when people come to [ Airbnb ] and they're flexble where to travel, we can inspire them to where to go. And this allows us to be top of funnel and be in the inspiration business. A lot of people think that the way to be top of funnel in travel is to sell flights because flights is the [ first ] purchase you make. I actually think the top of funnel isn't flight, it's inspiring people where to travel to. That's the first decision you make. Where should I travel? And so that's why we launched Airbnb Categories to highlight what makes -- our [ post ] unique, point demand where we have supply and get in the inspiration business. This starts to answer the most valuable question in travel, which is, where should I go? So that's what we're doing. That product has been used over 180 million times, [ 180 ] million times people have seen those listings. And the way we want to track success for that product is how flexible are people when they're traveling? Are they discovering homes they never would have seen? And are we able to point demand and, therefore, increase conversion and traffic? Another product I'll show on the back end is a product called AirCover. So let me tell you about this product. Last year, we launched a product called AirCover for host. This provides $1 million protection against property damage, a $1 million personal liability coverage. So it's really end-to-end protection, top-line protection for host. This product was so popular that the NPS, when you're home -- something bad happens at home, raised by like 70 NPS points, 70 points NPS, we've never seen a swing like this. And at this point, we realize if host love AirCover this much, why don't we launch AirCover for guests. And the analogy I make with AirCover was a little bit like Prime with Amazon. Amazon had some major innovation 20, 25 years ago at retail, and it's that they had the widest selection of products you can ever imagine. But Amazon had an Achilles heel. And Achilles heel is they were competing with people beyond a walk in the store and get something out, right? And back then, remember, 20 years ago, it was hard to track packages. And so Amazon took a weakness that you can't get the package right away and they turned it into a strength with next-day or same-day delivery. The analogy with us is that our strength, similarly, is we have the widest selection of homes all over the world. We have the most unique spaces. Our Achilles heel historically is that we are not as consistent on average of an experience as hotels. So we thought what if we could turn a weakness into its strength, and that is what we try to do with AirCover. It basically provides a guarantee against the home not being as described, if you can't get in or if the host cancels on you. And this is part of a major proportion of innovation that we're going to be doing. We think AirCover could be a major franchise. If we are successful, people that would usually stay in hotels or not use Airbnb, will now use Airbnb. So those are 2 major franchising for guests, get a lot more traffic, get people that travel to more destinations and give them the reassurance that everything is going to be good along the way.

Okay. I want to turn to the supply side of the equation because this is probably another pretty large investor debate that comes up. If you're right on the world view of where we're going as consumers and the demand is there, how do you continue to grow supply to meet the demand, right? And I think we've seen a lot of innovation from the company in the last couple of years in incenting a host and lowering friction for the creation of host. Maybe walk us through a little bit of what you've built on the host side that has set you up for that growth on the supply side and how we should be thinking about innovation, going forward, on the host side of the equation? And how much unlock you have to sort of aim after there?

Yes. So let me -- kind of it's got 3 parts. The way we think about supply, 3 things. The first thing is what's unique about Airbnb is that we did not recruit the majority of our host on our platform. Most of our host, the #1 source of post, you know where they come from? Prior guests. When you get into Uber, the likelihood that you're going to decide "I want to drive for Uber" is low, [ except for ] people at this conference. But you might actually stay at Airbnb and then decide, "I have a home or a second home, maybe I'll put on Airbnb." And in fact, in Q2, 36% of host were people that had just traveled. They were guests before. And so that's the first phenomenon we see that people travel on Airbnb. They have a good experience. They're in someone else's home and they think to myself, "Wait a second, I have a home, I can rent my home while I'm gone." And so that's the first thing. The second thing we notice is unlike, say, the OTAs, most host on Airbnb are individuals, basically, they are consumers, the regular people, the top professions of host Airbnb are school teachers, healthcare workers, students, the 55% of them are women. So they're not thinking of themselves as each host as a competition to them. So what we see is that when demand goes up, host tend to tell their friends, "Hey, I'm making a lot of money." And so we noticed in Q2 of this past year is, compared to 2019, nights booked were up 24% and supply was up 23%. In other words, supply attracts demand, demand attracts supply, and that's the first thing they're seeing with the network. The second thing to know, though, is that that's not good enough. We want to do things to recruit supply. So there's really 3 things we do. The first thing is we tell the story about how much money you can make on Airbnb. The economics are pretty astounding. What people don't realize is that 50% of people get a booking within 3 days listing. Isn't that amazing? 75% of hosts get a booking within 8 days of listing. Imagine like you have an app on your phone, in 15 minutes, you can list your home, and ask that you've already paid for. All you got to do to make sure it's clean and it's [ similar ] hospitable for people. And then suddenly, you can be making $500 in 3 days. And so this -- we just got to get people in the funnel. The next thing we want to do is make sure it's easy. So we have this program Ask a Superhost, where if you're a prospective host, we can pair you with our very best host, and they can take you under their wing. And I think this is even better than calling customer service. Let's have our community train new community members. Since we launched this product, nearly 0.25 million people have gone through the Ask a Superhost program, which is pretty cool. And the final thing is the #1 reason people don't host, other than the fact that they don't even think about it, is they're worried about something happening to their home. They're worried about strangers coming in and having damage to their house. And so that's a major part of the innovation that we've had with AirCover for host. And as far as where we're going to take this? What I would -- I mean, we don't really like to give away too much of a roadmap, but I will say that every year, we do these 2 releases, May and November, in this November, we're going to have a pretty big update for Hosts. You'll see some upgrades to protections and making it even easier to list on Airbnb.

Got it. So it's really -- the lowering friction is a bit of the listing process getting easier as well as the verification layer, elements of safety and travel?

Yes, it's basically like removing friction, making it easier to list, but also giving them somebody to talk to, who just did it because you imagine like you're going to put your home up on Airbnb, you are going to have a stranger in your home. A lot of people are a little nervous about that. If you point them and connect them to somebody in their city who just did it, they're going to feel much more confident. And once you do that, make sure, if anything ever does go wrong, you have their back and then tell the world about it. That's basically the strategy.

One follow-up there. The holy grail of any marketplace platform business model is being able to mine both sides of the platform for sort of a flywheel effect, which is a very overused term at this point, but still appropriate. How actively do you mine guests to potentially become Hosts? How should we be thinking about you...

Well, I think it's the #1 source of Hosts. So I mean, going forward, there is a percentage coefficient, where if enough guests converted to host, you would never need to recruit host ever again, you would have a flywheel. We're not quite at that place, but there is a number that you could get to. So yes, we do look at -- we are looking at optimizing that. When people stay on Airbnb and they leave a 5-star review at the moment, they've had a really good experience. They're really prime to consider, "Hey, you just had a great experience in someone else's home. Do you realize that within 3 days of booking -- like you're very likely to get a [ booking in ] a week if you list?" And so I think that's a huge opportunity. Again, I think converting guests to host, getting a host to recruit other hosts, making it easier to host and then pointing demand where you have supply, this is our arsenal. And no one thing is a silver bullet, but together, I think that explains why supply is growing as fast as demand, and we have more supply than ever before. And the other thing I'll just say is 90% of our host are individuals, as in they are not property managers, they do manage maybe 1, 2, 3 properties, but they're not on API. And we think the big growth opportunity is really across all sectors, but probably especially individuals, especially as we enter into a recession.

Got it. Okay. I want to turn next to what's broadly been called sort of experiences, attractions, local. It's taken a lot of different flavors in the broader travel industry over the last couple of years. But how do you think about the opportunity set that sits with amplifying what you built on the platform side and connecting guests with more local experience over time? As a measure of expanding what they spend on the platform, giving them better experiences locally to have a better trip and a better vacation, how do you think about building both supply and demand on the local side against the broader accommodation space?

Accommodations or experiences?

Experiences and if [ you take ] into the account to what you've already built?

Well, yes, so. A number of -- just to kind of go back, a number of years ago, I remember saying, I think, like, "Wow, we've already monetized the biggest asset and someone's life at their home, what's next?" I think someone replied, "Actually, we probably haven't monetized the biggest part of your life. It's not your home, it's your time." And then suddenly, we started thinking, well, what else could people share other than their home? And we started looking at -- we started looking at mining our community. And we started noticing that host and our community were saying, "I also provide a wine tour, or I also have this like farming experience." And we started realizing that there was an opportunity to not only provide what to do when you -- where you stay when you travel, but what to do. We launched Airbnb experiences. These are 2-, 3-hour activities, hosted by a local. They're really special. And we thought that 2020 was going to be the breakout year for experiences. And then of course, like everyone's plans, they just got iced over. And not only with 2020, not the breakout year for experiences, but we actually had to put the whole product on pause. And so last -- 2 years ago and last year -- 2 years ago, the product is on pause. It's been slowly coming back. But now, I think, it's ready to invest like significantly in this business again. And the reason why is, as big as our homes are on Airbnb and guests -- like Hosts have earned $150 billion since we started. So it's obviously pretty popular. Guests, from a kind of satisfaction standpoint, from a 5-star review, prefer experiences more, the percentage of bookings with experience that ends with a 5 star review are higher than those in homes. The primary issue is the awareness for that product isn't yet there because we haven't really heavily marketed it, and it just didn't seem like appropriate to market this and push us to our customers when people were worried about meeting strangers and wearing mask. So I think that next year is going to be a big year for Airbnb experiences. We have some really exciting things in the roadmap. And I think that experience is a great flywheel for homes because, again, the #1 thing in travel is you want to have direct traffic, booking something unique that you can't find anywhere else. Those are my 2 indications of health of the marketplace. How much inventory do you have that no one else have and how much traffic do you have you didn't pay for? If you can connect those 2 things, that's the holy grail. And what experiences does is, it does a couple of things for us strategically. The first thing is this inventory that no one else has. So even if some homes are cross listed, you'll come to Airbnb direct traffic because there's something no one else has. And even if you don't book an experience, you'll be looking at experience, you might look at home. The second thing to do is, again, we want to strategically point demand where we have supply. And to do that, you often need to show people not just where to stay, what to do when they get there. So we think these are reasons why this product can be really successful. And I'll be honest, like I think that people are yearning to leave their house. Like you can only watch so many shows on Netflix. And think about it, as people are working remotely, it means many people are working from home. And so travel is a way that people are able to leave their house now.

Got it. Okay. I know it's a small piece of the business, but maybe just want to understand how hotels fit into your broader strategy on the supply side? I know you did an acquisition pre-pandemic, could just be the last piece of the puzzle of the [indiscernible]?

Yes, we bought HotelTonight a number of years ago. I'm really proud of that product. It's one of the best hotel booking applications in the United States. And the way we think of hotel is hotels is not our core business. The core of the Airbnb are Hosts, especially individual host. That being said, millions of people come to Airbnb looking for a place to stay, and they're not always going to find what they're looking for in the individual host. And so we think of hotels as a way to fill in our network gaps. We don't want ever anyone to come to Airbnb and not be able to find a place to stay. And so hotels are a really strategic way for us to fill in our network gap. Also, let's face it, if you show up somewhere at midnight, you need to leave at [ ADM ], I think a hotel is probably a better use case than a home. And so that's what it is. It's really a way to fill in network apps and fill in certain use cases.

Okay. I want to turn back to your stated views on marketing and what you learned during the pandemic. What I hear from investors is sort of two sides of the coin. The more optimistic one is they don't have to spend much on marketing, but what if they did spend more on marketing, when they amplify their growth to accelerate their growth and accelerate disruption. So how do you think about leaning into marketing against your views that you might not have to? That would be question one. The flip side of the coin is as the travel industry normalizes and we come out of the pandemic, do you ever -- are you ever concerned that you might have to go back into marketing in a much bigger way because it is a fairly competitive intensity that the industry finds itself in a more normalized environment? How do you think about both sides of that coin that could [ orch ] your views about marketing longer term?

Yes. It's a great question. I mean, again, what is Tesla's marketing budget? How much does Tesla spend on advertising every year?

I don't know the answer.

I think the answer is like close to zero. I don't think it does advertising. And yet, it's amazing like how many people talk about Tesla and how many people want it. Now I don't have a Twitter following of 100 million people. So I can't -- we do marketing. But there's a lesson there, right? The lesson is that the more unique your product is, the more people love it, the more word of mouth you have, typically, the less you have to spend on marketing. And the majority of our bookers, people booking at Airbnb, are return bookers. Majority of people who come to Airbnb, they come to Airbnb because their friends told them about it or they read about it in the press. I mean travel is a very weird industry where it's completely dominated by marketing, and it's dominated by a lot of performance marketing. And yet, PR is probably the most important thing that we do, other than word of mouth. And then our theory of marketing is not a way to buy customers. So I don't think we're competing to buy customers because we're not really buying customers. We do some performance marketing, a lot of it's branded [ SEM ], or it's a way to laser in and match supply and demand. But mostly, we think of marketing as education. I think of marketing as something you do not necessarily one time, but it's more like an investment. We're investing in educating people about our new products. We have AirCover. Let's make sure people know that we have these protections. We now have Airbnb Categories. So let people know that we have these categories. And so that's what I see. And so what that means to me is that I don't think we're ever returning back to the percentage of marketing as a percent of revenue as we were pre-pandemic. I mean what we're seeing is the world is normalizing. We aren't increasing marketing, and bookings have been stable. So if this moment is any indication of what the post-pandemic era is, then we're going to stick to our marketing strategy. And by the way, we do still spend a significant amount of educating customers, just not as much as others.

Got it. Okay. I want to get into a couple of last questions as we get here into the last 10 minutes. Taking what we've talked about so far. And maybe this would be the sum-up question on the strategy piece of the business, what do you see as the most mission-critical piece of your strategy that you have to execute on over the next 3 to 5 years for your vision for the company to be sort of realized?

I mean it's like a flywheel. So number one is make sure we have enough hosts. Number two is make sure that we have incredibly inspiring frictionless way for guests to discover and find those hosts. Number three is make sure that we provide incredible service end-to-end for guest and hosts every step of the way, having the best service in all travel. And number 4 is beyond that, every year, we want to put out new, big inspiring ideas that I think capture people's imagination and continue to unlock more really market share and more segments of travel. And maybe I'll just end with that last one because we spent the last couple of years, mostly getting focused. I get a last a lot like what about future monetization opportunities, where will you go next. And we're actively working on some pretty exciting things. What I'm most excited about right now is going from where we've been in the last 2.5 years. The last 2.5 years, we were in cost-cutting mode. We were getting back, we were getting focused on our core business. We're shuttering a lot of businesses. We took our very best people and put them on the most important problems of the company and really got the core business going. Now, we're looking above the horizon at new, exciting innovations. And I'm really excited because I think that we can put out some really exciting ideas. And I don't -- I want to just -- I want to believe our best ideas weren't when I was in my 20s. I want my 40s to have some pretty big ideas, too. So we're working on some pretty exciting things down the pipeline. And that's how we're thinking about it. So make sure we have enough hosts, make sure we have a great booking experience for guests, make we provide great end-to-end service each step of the way and then put out some new ideas that capture people's imagination.

So I guess another big debate we get a lot from investors is just a look into how the company thinks about allocating capital. So obviously, you have these growth goals and you've got investment in growth. But as you stated earlier, you're more profitable today than you thought at the time of your IPO, and you raised a lot of money through the IPO process and have a balance sheet that is very strong. How do you think about looking at your balance sheet today, the growth opportunities ahead for you and elements of organic versus inorganic growth and possibly even returning capital to shareholders over time? And how does your thought process move across an array of those choices about to best get a return on that capital?

Yes. I mean, I think that like organic growth is the primary then inorganic growth and then returning money directly to shareholders, probably in that order. That being said, we generated so much cash, so much more than probably was forecasted a couple of years ago that we thought now was a really good time to do a share buyback program, especially considering where the stock price was. But we're going to be continuing to invest heavily in growth opportunities. I think we've only -- number one, I think we've only scratched the surface of our core business. The number -- every year -- for years, we've raised a round of funding from investors. And every year -- this is like 2011, 2012, 2013. And every year, the question was, but how big can this market get? And no one ever knew and no one ever really can know because people were trying to think of, "Well, what percent of the hotel market can you capture?" And one of the things we are saying is, well, number one, we're actually making the travel market bigger because a lot of people travel that couldn't afford to stay in a hotel. Remember, half of our business is for a week or longer. Most people can't afford us in hotel for a week or longer. That's cost prohibitive for a lot of people. And so a number -- another big reason people travel [ Airbnb ] is, they stay with friends and family. That's not part of the hotel market at all. So I think that we're only scratching the surface of travel on Airbnb. But then there's the housing vector, 20% of our nights booked aren't even travel, they're for longer-term stays. And so there are a lot of different areas that I think that we can be investing in, in the coming years. So we're going to be pretty aggressive. At the same time, I think that there's another lesson that we're learning in Silicon Valley, and it's that you don't need to spend a ton of money to innovate. The companies with the biggest R&D groups, companies with the largest teams of engineers aren't always the ones that innovate the most. We've really tried to shift our model from like the Navy to the Navy Seals, a small, lean, elite team, and it turns out that we can invest heavily, but we don't need to be like getting in the red or anything close to that. And so that's how we're thinking about it. We're going to be staying very, very aggressive, primarily on organic growth. We will be opportunistic on anything that's inorganic. And we're going to stay really lean. And I think that means that we're going to remain a very profitable company.

Okay. Last one, as we wrap up, I've been asking every CEO that I've had so far at the conference, as you think about either your own business or the industry you more broadly compete in and execute against, what do you think is the most outside-the-box thought that you have or out of consensus view that you think investors or the broader finance community doesn't appreciate about your business, and what might happen over the next couple of years?

That's a great question. Yes. So what I would say, I think, is when the pandemic occurred, travel dropped for everyone precipitously. And I think so many people were wondering how long would it take for travel to get back to the way it was before the pandemic. Some people were even asking, will it ever get back to the way it was before the pandemic. And I think that at that time, we were preparing for what we thought was going to be a huge travel rebound. And what we saw last year was the biggest rebound to travel in a century. And I think then the new question was what's going to happen now with travel? Is it going to [ modulate ] -- was that like really pent-up demand? And so here is my thought to that. Before the pandemic, and this is me being broadly, most people went to an office, where they would see other people and they'd have coworkers. They went to stores where they would see other people. They go to a movie theater, where they'd be around other people. And now with the world we're living in, a world where many people are working from home. So the office is now at your house. The theater is your living room with Netflix, and shopping is on Amazon also from your home. And so what's happening is increasingly more and more of our lives are in home, but also more and more lives are in front of a screen. And as more of our lives are in front of a screen, I think we want a means to leave our house and to get off screens. And I think that's what travel is going to do in the coming decade. It's going to be the antidote to us just endlessly scrolling on the screen or watching something or buying something or working. And so travel, I think, we are just scratching the surface. I think there is a huge revolution at travel. I think travel is going to blur with living. I think suddenly, people are waking up and realizing that they don't have to be so tethered to the city they live in. They can live for a month in Paris if they ever wanted to do that, they maybe now have that flexibility. And that they're also realizing life is short, I want to see my friends. I want to meet other people. And travel is a great way to do that. And I think the type of travel that's going to emerge is not necessarily old-school business travel. It's not necessarily people waiting with selfie sticks in front of a landmark. It's going to be the reason why travel was special in the first place, connecting with other people, either connecting with your friends and family to reunite, to go to conferences to meet one another or to just make friendships. That's what I think is going to happen. And I think travel is going to be one of the biggest industries in the world, and I think we'll be right there because what people are yearning for right now, it's their yearning for connection. They're feeling very isolated, they're staring to screens, and they need an alternative. And that we'll provide.

Great. Well, Brian, I really appreciate you making the time, sharing your thoughts. Please join me in thanking Airbnb for being part of the conference this year.

Thank you very much.