That strikes me as a pretty generous severance package.
The severance package is the core metric to judge a company that is doing layoffs. In this case, it sounds like Airbnb did the right thing. Airbnb fired people well in advance of when they were actually forced to. This enabled them to provide an ethical severance.
Some companies wait until the last minute and then provide two weeks or similar. These companies should be publicly shamed for all time.
4x12 = 48 weeks of compensation disbursed by the entity. Restated compared to some nightmare no severance scenario meant they effectively terminated 4 FTEs to achieve slightly less than 3 FTEs of cost savings (adjusted for healthcare costs).
I'm not arguing against AirBNBs approach btw. Their CEO had a wonderful podcast on the Masters of Scale pod roughly two weeks ago.
However the Rawlsian philosophy on that marginal employee that got terminated effectively to fund the severance for herself and her colleagues is a tricky ethical consideration.
So if AirBNB went out of their way to mention COBRA, it likely means they're covering it.
That just means that it is available to you -- not that they are going to subsidize it.
I was under the assumption that companies offered severance pay as a means to save face.. and this is not part of the offer negotiation.
If you are paying for COBRA you are doing it wrong. You take those 60 days to find private insurance. You basically get 2 free months of health insurance since you cancel on that 60 day mark and never pay. If on day 58 you need health insurance you pay COBRA. Otherwise - your new private insurance kicks in on day 60.
[Yes! You could have history of heart attacks and not find cheaper private insurance but I am hoping that isn't you!]
With that schedule, anyone who worked at AirBnB for four years or less looks to be in a similar position.
in Korea this rule is in actual labour law. One month's salary for each year employed fulltime, for everybody.
Sure, there is a slight PR benefit, and you have slightly more chance of rehiring those employees later maybe, but as a shareholder it really seems to be throwing money away unless the severance package was agreed upfront when the employee was first hired (ie. as an incentive to join the company).
Separated? Is this American english?
https://gusto.com/blog/people-management/employee-separation...
Separated almost sounds as if this was consensual.
That being said, Airbnb gets some credit for a decent severance.
In California those can last up to six months.
Employers paying for that kind of benefit is either tax-advantaged, or just consistency of policy between their US, and Canadian offices. Not sure which.
However it is hardly comparable as unemployment benefits would kick in (on average 72% of your previous salary after taxes, maximum duration 24 months with decreasing amount). For instance if you worked 3 years and your annual salary was 80k, you could get a benefit of 57k over 12 months.
Because if they believed things would start to recover by fall, wouldn't you just pay the people as normal and make a judgement call around then? You're spending the payroll money either way -- 14 weeks of severance and people stop working immediately, or 14 weeks of payroll and people are still working.
There's also going to be a lot of pent-up demand from people who didn't lose jobs and had no outlet for leisure spending during the quarantine. I'm not sure which will win out.
People will be more willing to stay at a hotel where at least some level of cleaning is guaranteed/expected.
In Airbnb, and I have no such guarantees and no idea who stayed at the property before me.
Some economists are hoping for a better outcome than this of course, but you can connect the dots and see what people are planning for, as you've done here. Airbnb is not alone in planning for depression, and the travel industry will be worse than most.
You need to operate the company under the assumption that this will happen for a very long time, and that even afterwards people will think about travel differently
If you accept that scenario your decisions in the present about finances, investments, and employment all radically shift. My decisions have radically shifted to accommodate even though I have two essential industry employers with virtually no risk of being laid off.
What I personally use as a thermostat on how to proceed during adjusted life is the military. How they conduct business is bound by finances not beholden to a profit stream and they do not conduct business out of political ideals/favors. When they lift travel restrictions I will feel more confident about traveling. Once they reopen schools I will more confident about going back to work in an office building. When they drop the need for face masks or mandatory forced quarantine I will feel more confident stepping away from social distancing. Until those things happen I will continue to play it highly conservative in accordance with the suggested medical guidance to avoid exposure.
You also have the case that like stock prices employee hiring is often based on projections for anticipated need in a high-growth business - it's such a friction point, you are trying to stay ahead of the curve to build the capacity to grow now and handle that growth 12 months from now
Either way, it's a good package, since most people are getting zilch at other places.
Note that '100%' includes the growth prospects that Airbnb still had in January 2020. 'startups' like airbnb hire for growth. 25% workforce cut is roughly the growth prospects (20-30% per year) that airbnb had last year.
So no, that recovery won't come in just a few short months. For one because there's still a global pandemic related global lockdown. Second, because an effectively rolled-out vaccine is not expected until at least next year. Third because tourism is hardest hit in a normal economic crisis, in a recession and 20% unemployment figures like now, the first thing you stop doing is taking international trips for fun. Fourth because in a virus pandemic, tourism (concentrated populations gathering in hotspots like a museum, bus, airplane etc, and transporting the virus across borders) is a high-risk activity that gets restricted way more than other economic sectors like farming, manufacturing, or work from home office jobs. Fifth because most of airbnb's stock is caught up in one of two categories: people renting out their home when they're away on vacation, these people are staying home and aren't making their real estate available. Or professional airbnb companies which purchased real estate that's only economic with large revenues, financed with leveraged mortgages, many of these companies are set to collapse in a 3-month shutdown, let alone a 6-month low-activity industry. A lot of these will be folding and selling their properties. Both the demand side and supply side is going to take a hit, airbnb will run much less business for the next year at least and will need to bounce back. It won't be easy. Especially in an industry where you'll see dirt-cheap hotel prices competing for a few years.
I wonder how this is or will impact the real-estate market? Are enough people going to foreclose without interested buyers that the market takes a plunge?
If you bring cleaning supplies and just wipe down high-contact areas like counters, doorknobs, refrigerator handle, etc. when you arrive, it doesn't really seem any more risky than something like bringing in groceries from the grocery store, which may have been touched by other people, the cashier, etc. Or to be extremely cautious, you could pay for an extra 3 days prior to arriving to make sure nobody has touched anything in that time. If you're gonna be there a full month anyway, what's another 3 days added on to the cost.
The whole industry is fucked and it will probably kill some countries too, a lot have a massive, unhealthy dependency on tourism.
Airbnb are going to have issues, as the longer this drags on, the more landlords are going to be forced to sell or commit to long-term rentals, limiting the number of eligible places, even if there is some later snap-back (due to say a very effective vaccine).
It will take 5+ years for them to get back the same level of inventory/hosts/customers as they had in 2019. Many hosts will foreclose on their rented properties during 2020 or convert to long-term rentals. Airbnb may lost inventory for multiple years, not just months.
The second wave will be the nail in the coffin for a lot of companies, I think Airbnb is one of them unfortunately.
This is a fair point, but it also suggests strongly that a significant minority of their business is month to month rentals, possibly in place of leasing.
And hey, being frank, I wouldn't mind considering going somewhere else for a few months now that I can work remotely for a while.
It's costing us an arm and a leg, but we've been very fortunate in that we can afford it. We normally live in a high-traffic apartment building with multiple dogs that require walks, so exposure seemed likely (and indeed a doorman later tested positive).
The smarter move is to book a 2-3 days and work out a deal with the host.
The current property I'm staying in I originally found on AirBnB for twice the price at which I'm currently paying. And I have the peace of mind of not being locked in to a place for weeks/months in advance since I don't know how long I'll stay here.
I was wondering about that too. My next-door neighbors vacated their place when the lockdown started, but someone else has been living there. Since they often rent their place on Airbnb for weekends, my assumption has been that this is another Airbnb renter. She's been there for over a month now.
So... you want to take a holiday during a global pandemic?
There's been this sweet spot with AirBNB where you can rent a place for 1-2 months for a relatively small monthly premium over a 12-month lease that I've been planning to take full advantage of this year, already having been remote. A lot of AirBNB hosts have started preferring these sorts of arrangements because people are less likely to cause trouble. I can't help but think the AirBNB that replaces hotels might drop by a lot, but the mid-term monthly rentals might bounce back a lot quicker as people become less location dependent on work. I know I absolutely am planning to go somewhere warmer in the winter months.
There's still a huge opportunity in a hassle free monthly rental experience. Month to month through almost any legacy property management company is an absolutely dreadful experience with huge up front deposits and being treated basically like a criminal. I have no idea how big this market is admittedly but its been a very interesting value prop for me.
For example Argentina has cancelled ALL plane flights (in/out and domestic) until September.. and unless you have signed authority you can't even drive town to town. So anyone that was travelling there is now stuck, and are essentially forced to rent a place and stay put.
A few friends are caught there, and many others in similar situations around the world.
Is that unusual?
https://de.wikipedia.org/wiki/COVID-19-R%C3%BCckholprogramm_...
Outside of the bubble of Bay Area and North East tech industries, a lot of younger people couldn’t care less, especially when seeing how insanely low the mortality/hospitalization rate is for their age group. Before I get the lecture, I know that them spreading it is also a risk, spare me.
People who think no one is going to travel this summer are deeply deeply entrenched in their preachy sanctimonious echo chamber of friends. Go look at how many young people were having picnics in groups at NYC parks this past weekend and then tell me no ones going to travel this summer. Get real.
I was looking at some listings in Amsterdam and the prices seem really cheap for a weekend at the end of this month.
The inventory seems fairly limited, however. Perhaps hosts are already pulling their properties off the short-term market.
Further anecdotally, I've been closely following the rental market in my city because I'm looking for a long-term place for August. There's been a noticeable drop in prices, and _huge_ quantities of listings in buildings that were notorious for being "AirBNB hotels". Furthermore, lots of listings are obviously ex-AirBNB units - tells include being only available furnished, only available for ~4 month rentals, descriptions that include "Perfect for your next stay!" or words to that effect, and my favourite: hotel-style "No smoking" cards caught in the listing photos.
I became an Airbnb customer in early April because of the disease. I was consulting for a client away from home, but my hotel room's mini-fridge was not cutting it, so I rented an Airbnb suite which contained a washer, dryer, oven, microwave, freezer and full refrigerator. I go to the supermarket, stock up on food, and don't have to leave for a week.
So I guess it isn't quite as bad as you'd imagine. I'd guess the purely vacation rentals are suffering, but the ones that were typically business renters could be converted to long term.
Also, the debt they took on may have been partly to cover these lavish severance packages while also extending the runway.
And yes, this is extremely lavish. Paying severance that appears roughly equal to the median annual income in the USA.
Why? Can't they rehire the people they laid off during this period?
I'm not so sure. Recent news has been that lots of startups are laying people off and Google has slashed budgets and frozen (or at least scaled back) hiring across the company.[1]
Companies like Google and Facebook that rely on ads for most of their revenue aren't going to be doing so well when a lot of the businesses that buy their ads are closed down.
Companies like Apple that sell premium-priced goods are also not likely to do well in a recession - people who have lost their jobs or are afraid of losing their jobs won't be running out to buy a new iPhone.
[1] https://www.cnbc.com/2020/04/23/google-to-cut-marketing-budg...
Wired published an article about this effect in London [1] and I've seen price drops as much as $500 for condos in the downtown core of Toronto on Zillow already.
Good to hear that they are giving a decent severance package.
Thought I misread that the first time through. What did those 7,500 do?
- Airbnb has sufficient cash in the bank to survive the crisis.
- A significant % of hotels and budget chains will not survive the crisis --> decreased competitor supply
- People will be looking for budget options when traveling --> increased demand for Airbnb
- People will seek to make extra income to make ends meet --> increased supply for Airbnb
To me, the severance and exit benefits do seem to strike an employee friendly tone. Kudos to the leadership to striking a good balance on keeping the business alive and doing right by their people.
Any which way these are hard decisions :(
Never a good time, but especially in this environment!
I recall that airbnb workforce has become very marketing lopsided (vs. tech). Whereas tech folks generally have an easier time landing, I imagine the environment for the next 9-12mos being very bad for marketing/MBA folks.
Airbnb is a simple CRUD app...it’s hardly a shining example of hard deeply technical engineering problems that are fun and interesting to work on.
Very optimistic. They should be happy to get around 25% of 2019 totals.
I know for a fact that by the end of summer (assuming places open up like planned), I will start traveling again. And I will be doing no less traveling this year than I would any other year. Of course, that won't be the case for everyone, but keeping that in mind, the 50% revenue drop seems like a pretty reasonable expectation.
That aside, if this whole pandemic manages to kill or mortally wound AirBnB, I won't be upset. What AirBnB does to cities, neighbourhoods and the long-term rental market is atrocious and it needs to be reined in.
The main criticism of delaying IPOs is that by the time they hit the public market, all the growth is gone. Markets learned this after Lyft and Uber, and Wework got punished for it. While there can be more corporate shenanigans in a private company, I also buy the justification for staying private that private companies can focus on longer-term thinking without quarter-to-quarter market expectations.
IMO People need to understand what that really is (usually not much) rather than blame the company.
Google, Facebook, and Apple all have enough cash to buy several AirBnbs rn.
https://www.inman.com/2020/03/30/airbnb-announces-drastic-co...
They try to take on fresh college graduates as employees in the Philippines for about $400/salary + benefits and try to resell them to companies as outsourced talent for about $1800/month.
Is COVID-19 the reason, or the excuse?
Layoffs always suck, no matter what, but this is laudable behavior on their part.
It's a lot easier to rehire someone who still likes you than to try and find new people.
Unsure if this will ring true to most hosts. They were heavily penalized with full cancellations, while Airbnb issued vouchers.
Airbnb will have to make a lot of effort to win hosts' trust back.
(dang, I wonder if the company release is a better article to link to?)
The lesson I took from this is to always have a backup plan in case of unforeseen events.
> totally you still have your job if you want, we are not laying you off, but I need you in the office everyday... Or you could resign if you don't like the new location...
Of course they can't just shut down....they have to hope and be ready.
All signs are pointing to a bubble being popped. It's going to be interesting to see how the tech sector looks in 9-18 months from now
If the 3-month notice is true and the compensation comes with that, then its still cheaper to let go now than in 3 months as there will be other costs like bonuses, expense claims for phone bills etc, other mandatory govt insurance schemes in some countries, more leave accrued. I'm not too convinced that it was all a nice gesture.
