Rob Chesnut is the author of Intentional Integrity: How Smart Companies Can Lead an Ethical Revolution
As you continue your social isolation journey, what decisions will you make today? Some folks have serious choices to make about how to provide for a family during an economic downturn. Others of us are trying to figure out how long we can go between showers. But for most of us, our decisions are not going to impact the lives of 150 million people. That’s the situation that Rob Chesnut found himself in earlier this year.
Rob Chesnut is the Chief Ethics Officer at Airbnb.
As a member of the Airbnb executive team, he and the team were faced with a decision that involved multiple stakeholders:
- 150 million Airbnb users.
- More than 650,000 Airbnb hosts.
- More than 100,000 local communities.
- 7,500 employees and their families.
How can you possibly make a decision that impacts so many people? According to Rob Chesnut, “In chaos, integrity is never more important. Tough times reveal character. How you act in a tough time is something that is long remembered.”
The Airbnb leadership team knew that they would have to make tough choices and tradeoffs. They didn’t have a playbook for how to handle a global pandemic. Nobody did. What they did have was a set of core values to guide them. And they had a way of thinking about ethical decisions. Rob Chesnut calls this Intentional Integrity.
A Multi-Stakeholder Approach
“A lot of companies have one stakeholder, and that’s the shareholder,” Rob explains. “And they make all their decisions around that one stakeholder. Airbnb has operated for some time with a multi-stakeholder approach. That’s one that’s increasingly being adopted in business now.
“We’ve got five stakeholders. We’ve got investors, just like any other company. But we’ve also got guests, hosts, employees, and communities where we do business. When we decide, we try to look at it through the lens of our stakeholders. How will this decision impact each of our five stakeholders?
“I wish decisions were easy, and that you could make a decision that is good for all five stakeholders. Unfortunately, that’s not usually possible. It usually involves some tradeoffs.
“You try to take a long view. You realize that this decision is not helpful to one stakeholder, but down the line, we’ll do something else that will be helpful. Over time, you try to benefit all five stakeholders.
Entering A Pandemic Without a Playbook
You’ve probably heard the story of Airbnb. Brian Chesky, Joe Gebbia, and Nate Blecharczyk founded Airbnb in 2008. Their first listing was for air mattresses in Brian and Joe’s apartment.
Airbnb grew rapidly over the next twelve years. With growth comes growing pains. Every decision led to a set of new complications. They have faced criticism for fair housing practices, housing affordability, and a host of other concerns. There was no playbook for confronting the challenges. They let a set of values drive their decisions.
“The problems you worry about are often not the problems that get you,” Rob explains. “It’s the things that T-bone you from the side, instead of the things in front of you.”
I asked Rob when the leadership team realized that COVID-19 was going to disrupt their business. “We’ve got Airbnbs all over China,” he told me. “We’ve got a China office. [COVID-19] is something that got on our radar when it got on the radar of our China office.”
COVID-19 and the Airbnb Cancellation Policy
Individual Airbnb hosts can choose their cancelation policy. There are some places on Airbnb that have a strict cancellation policy. “You sign up. You put down a deposit. You can’t cancel,” Rob explains.
“Now you’re faced with a tough situation. You have guests that planned to go to Italy. But they couldn’t go to Italy sometimes because the law wouldn’t allow them. Travel was shut down. So, what do you do?
“If you try to push them to go forward with the reservation, that’s bad for the guest. The guest has to either do something dangerous or lose their money.
“It’s bad for the communities because, at that point, communities were hurt by travel. Travel could spread the virus.
“On the other hand, hosts were counting on the money.
“And, Airbnb investors benefit when a reservation goes through.
“So, what decisions do you make when guests are saying, ‘I can’t follow through with the reservation. I want you to cancel it’?”
A Hard Decision, Guided by Ethics
Airbnb decided to exercise a provision in their contracts that recognized extraordinary circumstances. “We declared that this was an extraordinary circumstance, allowing guests to cancel reservations.
“That was good for guests. It was probably the right decision for communities in the world. It was bad for hosts. Hosts, who count on this money in many cases, were not going to get the money they were counting on. And of course, it was bad for Airbnb investors, because it was bad financially for Airbnb.”
Airbnb set aside a $250 million fund. They used those funds to reimburse the hosts for 25% of the value of the reservations. “It wouldn’t make them whole, as it was 25%. Still, it was a significant sum of money.”
Airbnb employees also kicked in. “Employees get a travel credit on Airbnb. We get $500 per quarter so that we can go out and stay at Airbnbs. Employees in one of our centers raised the idea. They said, ‘Look, we can’t travel. We would like to donate our travel credit to our hosts, who are struggling.’ Over 2,000 Airbnb employees gave their $500 travel credit, raising $1,000,000. We gave that money to hosts.”
Ethics and Layoffs
Airbnb’s revenues plunged. So, in early May 2020, Airbnb was forced to layoff 1,900 of its employees or about 25% of its workforce.
“It’s extraordinarily sad,” Rob explains. “Look, I hired some of them.
“We tried to do it in a way that demonstrates empathy. You try to be as generous as you can be.”
CEO Brian Chesky wrote a detailed and transparent message to employees, explaining the reasons for the layoffs.
“Employees were given fourteen weeks of severance; plus, an additional week for every year hey had been with the company. They were given one year of paid health benefits. One thing we were able to do was to give employees their laptops. We even repurposed some of our recruiters to help employees laid off.
“You do what you can. There’s nothing wonderful about this. It’s all sad.”
Leaders Sacrifice First
One decision did not grab a lot of headlines. “Leaders sacrifice first in times like this,” Rob told me. “You can’t lay off a bunch of people and continue to take a big salary and a big bonus. Leadership at Airbnb took a deep pay cut when it was immediately apparent that the pandemic was going to have a significant impact on the business.
“Simon Sinek says, ‘Leaders eat last.’ I think leaders have to suffer first sometimes.”
How Ethics Shaped Rob Chesnut
For Rob, his training in ethics started early. “I’ll never forget leaving a grocery store with my mom. She stopped near the car and said, ‘We’ve got to go back in.’ When we went back in, she started talking to the cashier. I assumed that we had been short-changed. What I realized in listening to my mom was, the cashier had given my mom too much money. I’ll never forget the shock and the gratitude that the store clerk demonstrated to my mom. It left an impression on me.”
Early in his career, Rob was a federal prosecutor. “I was putting a lot of young people away for long periods of time. Over time, it got to me. I wanted to do something positive for the world and prevent some of the sadness. So, I went on a journey to figure out how to get out of the prosecution world.”
The answer was not immediately apparent. “When federal prosecutors stop being prosecutors, they become defense attorneys. I wanted to build something more.”
When he sent out a resume, he didn’t receive offers. Sometimes, he didn’t even receive a response. “I felt stuck,” he confesses. “What got me through was engaging with the world.
A friend encouraged Rob to take up photography. The friend went so far as to buy Rob a camera. Eventually, Rob relented and took a photography class. “I ended up doing well. I ended up with pictures in galleries. And I won a national photography class.
“It told me something I had not realized. Maybe putting a limit on myself was not so smart. Maybe we’ve got more in us than we realize.”
Around the same time, Rob started hearing about a company called America Online, or AOL. “People started calling me. They wanted to prosecute this company.”
He decided to try the AOL service. “I got introduced to the internet, and it blew me away.” It was through his introduction to the internet that he found eBay. He started buying and selling photography equipment.
“One night, it hit me. I’ll bet eBay has problems with illegal items, fraud, and government regulation. I’ll bet they can use a prosecutor.”
Rob emailed his resume to eBay. “I got a phone call the next day. I was having dinner with Meg Whitman two weeks later. And two months later, I am an internet lawyer in San Jose, California.”