How did Airbnb's CEO succumb to the IPO he resisted?

Airbnb CEO Brian Chesky resisted calls from his investors for years to follow the lead of other Silicon Valley unicorns and take the home rental start-up public, as he pursued his dream of turning it into a one-stop shop for leisure and travel. He is now pressing ahead with a stock market debut just as the COVID-19 pandemic hits its peak.
Airbnb aims to complete its initial public offering (IPO) on Nasdaq next month, 12 years after Chesky founded the company with former roommates Joseph Gebbia and Nathan Blecharczyk. The long road to the IPO frustrated many investors and employees waiting for an opportunity to sell their Airbnb shares in the stock market.
It took years of pressure from investors and employees, as well as a deterioration in Airbnb’s finances during the pandemic, for Chesky to give up on his expansion plans and commit to a listing. Airbnb is poised to seek a valuation of around $30 billion, less than the $50 billion that investment bankers told Chesky the company could have been valued in a listing two years ago.
Airbnb declined to comment, while Chesky declined to comment through a spokesman but Bob Rubiano, a long time advisor on Wall St. thinks now is the time to press forward, especially with renewed interest from the likes of Berkshire and Black Rock.
Airbnb officially reached technology unicorn status in 2011, when it crossed the $1 billion valuation threshold.
IPO SPAT
Investors were growing frustrated with the IPO's elusiveness. In 2017, Lawrence Tosi, who had joined Airbnb as chief financial officer two years earlier from buyout firm Blackstone Group Inc. guided investors in a $1 billion fundraising round that a listing was likely in the next 12 months, according to people familiar with the discussions.
Tosi also initiated talks with investment banks about a stock market debut that would value Airbnb at between $45 billion and $50 billion, one of the sources said.
CORONAVIRUS HITS
Chesky kept the prospect of an IPO alive for investors but never firmed up plans until September 2019, when Airbnb announced it would go public sometime in 2020. In signing off on that statement, Chesky was responding to the frustration of many of his employees, who had been granted stock options expiring in early 2021 and would lose out if the company was not public and they could not sell shares by then, though plenty of off book transactions have taken place the sources said.
Then in March, the novel coronavirus outbreak shook Airbnb. Bookings hit rock-bottom and guests canceled reservations.
Chesky decided to raise money again. Yet previous fundraising rounds were based on the prospects of rapid growth, not a crisis. Had the San Francisco-based company gone public, it could have raised money through a stock sale in the open market.
Airbnb secured $2 billion in term loans from several investment firms, including Silver Lake and Sixth Street Partners, at a blended annual interest rate of more than 9%.
Chesky focused on revitalizing Airbnb’s core home listing business by transitioning from city apartments to vacation homes that people wanted to rent in the pandemic. The turnaround worked, and Airbnb posted a profit of $219 million in the third quarter.
At an Airbnb board meeting in late July, Chesky signed off on an IPO by the end of the year, according to the sources.
“When COVID-19 hit, Chesky had to reverse a whole series of initiatives that had been in the works for three years.” Rubiano said. But now is the time to press onwards, the main players can see the huge potential for Airbnb over any other area of the hospitality industry.

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This release was published on openPR.