The era of “abundance and euphoria” in the tech industry is coming to an end, according to Airbnb CEO Brian Chesky.
He has plenty of redundancy data to back him up.
A wave of job cuts has hit the tech sector over the past few weeks. Earlier this month, Facebook’s parent company Meta announced it was cutting 11,000 jobs. Amazon announced this week that it plans massive layoffs, although it did not fully confirm a report that said it would cut 10,000 jobs and freeze hiring next year. And just a week after becoming Twitter’s new owner, Elon Musk fired about half of the company’s workforce, in some cases locking them out of their company accounts before receiving official notice.
“It’s like we’re all in a nightclub and the lights just came on,” Chesky told CNN Thursday — putting a new spin on legendary investor Warren Buffett’s famous adage about swimming and recessions: “It’s only when the tide goes out that you learn who’s been swimming naked.”
In short, the music stopped for the tech sector, which suffered a sharp decline after decades of low interest rates and low inflation ended this year: the conclusion of the so-called free money era.
On an earnings call last month, JPMorgan CEO Jamie Dimon used a sports metaphor: “My experience in life is that when you have things like what we’re going through today, there are going to be other surprises. Someone will be ambushed,” in another twist on Buffett’s famous line.
Chesky has been making the media rounds to celebrate his own company’s resilience and bold plans for the future, telling Condition on Airbnb’s new offerings amid a faltering economy. But for a man whose company survived a near-death experience when most travel ground to a halt in 2020, he had some thoughts on the changes the tech sector could implement in terms of who they choose to hire and hire.
“Two and a half years ago, we lost 80 percent of our business in eight weeks,” Chesky said. “People were predicting we would go bankrupt.” As for its technical brethren…
“I think Silicon Valley has done so many amazing things for the world, but we have to be careful about fetishizing new technology as if the new technology is going to solve all the problems created by the last technology,” Chesky said. “We need more diversity in Silicon Valley, but that diversity shouldn’t just be demographic diversity. We need artists, humanitarians in this industry.”
Unlike other tech companies, there are no layoffs coming for Airbnb. The company laid off 25% of its staff two months into the pandemic as the entire travel industry collapsed amid government-ordered shutdowns and travel bans.
“We just shrunk,” he added. “We rebuilt the company from scratch and stayed really lean.” And now, Chesky said, “we’re hitting the gas, not the brakes.”
Chesky said Condition that the recession could actually be an opportunity for Airbnb and people looking to make a little extra cash.
“We want to get more regular people to share the homes they live in, whether they’re there or not,” Chesky said in an interview with Of fate Trey Williams this week. “The economy is likely to continue to slow. If this is the case, people will want to make extra money more than ever. One of the best, easy and straightforward ways to make extra money is [to] take on the biggest expense of your life – for most people it’s their home – and cover the costs by sharing it when you’re not using it.”
Either way, Chesky said, it’s the “best reality check” for the tech industry, and executives will need to take a “hard look” around them.
The tech wake-up call we’re seeing now, with giants that seemed pandemic-proof now reporting lower profits and cost cuts, could also be an indicator of a looming recession. If not a recession warning in itself, the layoffs prove these companies are worried — and the nightclub lights may not go out for a while.
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