The era of “glut and euphoria” in the tech industry is coming to an end, according to Airbnb CEO Brian Chesky.
He has a lot of layoff data to back him up.
A wave of job cuts has hit the tech sector over the past few weeks. Earlier this month, Facebook parent company Meta announced that it would cut 11,000 jobs. Amazon announced this week that it plans mass layoffs, though it hasn’t fully confirmed a report that said it would cut 10,000 employees, and implement a hiring freeze next year. And just a week after becoming the new owner of Twitter, Elon Musk laid off about half of the company’s workforce, and in some cases even closed their company accounts before receiving official notice.
“It’s like we’re all in a nightclub and the lights just turned on,” Chesky told CNN on Thursday, adding a new twist on a famous quote from legendary investor Warren Buffett about swimming and slacking: “It’s only when the tide goes out that you learn who was swimming naked.”
In short, the music has stopped for the tech sector, which has seen its market cap fall after decades of low interest rates and low inflation ended this year: a conclusion to the so-called era of free money.
Last month during an earnings call, JPMorgan CEO Jamie Dimon used a mathematical metaphor: “My experience in life was you had things like what we’re going through today, there will be other surprises. Somebody’s going to be a sneak,” — in another twist on Buffet’s famous line. .
Chesky has made the media rounds to celebrate his company’s resilience and bold plans for the future, saying luck About Airbnb’s new offerings amid a faltering economy. But for the man whose company survived a near-death experience when most travel stopped in 2020, he had some ideas about 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% of our business in eight weeks,” Chesky said. “People were expecting us to go out of business.” As for his fellow techies…
“I think Silicon Valley has done many amazing things for the world, but we have to be careful that there is a fetish for new technology, as if the new technology will solve all the problems that the latest technology has created,” said Chesky. “We need more diversity in Silicon Valley, but that diversity shouldn’t be just demographic. We need artists and humanists in this industry.”
Unlike other tech companies, layoffs don’t come to Airbnb. The company laid off 25% of its staff two months into the pandemic, as the entire travel industry disintegrated amid government shutdowns and travel bans.
“We just got together,” he added. “We built the company from the ground up, and we stayed really lean.” Now Chesky said, “We hit the gas, we don’t hit the brakes.”
Chesky said luck That the recession may actually be an opportunity for Airbnb and people looking to make some extra cash.
Chesky said in an interview with Wealth Trey Williams this week. The economy will likely continue to slow. If this is the case, then more than ever, people will want to make extra money. One of the best, easiest and most direct ways to make more money is [to] You take out the biggest expense of your life—for most people, it’s their housing—and you bear the cost by sharing it when you’re not using it.”
Either way, Chesky said, this is the “ultimate reality test” for the tech industry, and CEOs will need to take a hard look at them.
The tech wake-up call we’re seeing now, with giant companies that seemed resistant to pandemics now announcing lower profits and cutting costs, could also be an indication of a looming recession. If not a warning in and of itself of a recession, the layoffs prove these companies are worried — and the lights may not go out in the nightclub for a while.
The new Impact Report weekly newsletter will examine how ESG news and trends are shaping the roles and responsibilities of today’s CEOs – and how they can better overcome these challenges. Subscribe here.