it was supposed to be the year that Airbnb went public.

They were supposed to be the hottest offering

of this year.

- [Narrator] In just under a decade,

Airbnb went from a single air mattress for rent

to a global company valued at more than 30 billion dollars.

The home sharing giant has thousands of employees,

over three million hosts, and seven million listings

in over 220 countries.

It even branched out with a new division called Experiences.

Which allows guests to book outings.

But travel is now at a stand still.

Airbnb's planned listing is in doubt.

Expected revenue is down by at least half,

and CEO Brian Chesky said 25% of staff will be cut.

So how did one of the most successful startups of the decade

become such a vulnerable company?

- Airbnb was founded in the aftermath

of the 2008 financial crisis.

A lot of ordinary people had lost their jobs

and were looking for secondary income.

Once the idea of sharing your home with someone took off,

a lot of people bought into that promise.

- You know we had revenue from day one.

And we didn't actually need to raise money

at any given point.

We decided that we invest ahead of growth

and we've always tried to think about it like a throttle.

So that we could at any given point

throttle into profitability.

- Airbnb was profitable by a certain measure

in 2017 and 2018.

So that gave investors a lot of confidence

and excited everyone, really,

about the prospect of a startup like this

that has become a household name

around the world to go public.

- These are beautiful homes.

- [Narrator] The company spent big

during this period of growth.

Administrative costs increased 113% between 2017 and 2019

as they hired thousands of employees

and built out a corporate headquarters

in a trendy San Francisco neighborhood.

Then 2019 ended with a tragedy.

- Airbnb now says it is banning house parties.

That after a shooting left five people dead

in San Francisco in a suburb there on Halloween night.

- This mass shooting was really a moment of reckoning

for Airbnb and that's what led them to invest

over 100 million dollars into safety initiatives.

- [Narrator] These expenses helped bring Airbnb's

total costs to 5.3 billion dollars last year.

More than double what they were in 2017.

- You had board members grilling some of the executives

and saying, "Hey, your costs

"are outpacing your revenue growth.

"Lets reign that in, let's control that."

And then of course the pandemic hit

and changed everything for Airbnb.

- China says the number of people infected

by a mysterious respiratory virus

has more than tripled over the weekend.

- [Narrator] In January, officials in China

issued local travel warnings and restrictions

following the spread of Covid-19.

- It wiped out bookings over night in China.

So remember at the time,

no one thought this would become a global problem.

- [Narrator] And then on March 11th, President Donald Trump

announced new international travel restrictions.

As Airbnb bookings fell, Chesky held in-person meetings

with employees to discuss what these new developments meant

for Airbnb and their plans to go public.

- What was happening was a lot of anxiety

was building among employees

because a lot of them have stock options.

And those are set to expire later this year,

which meant that if they didn't go public this year,

a lot of valuable options that employees hold

would just be worthless.

So Mr. Chesky really took it upon himself

to reassure employees, to say,

"It's gonna be okay.

"We are still very much going to list this year."

That changed in a matter of days.

By the end of March, he struck a more cautious tone.

He held a video conference with employees

where he said everything is on the table.

- [Narrator] Around this time many guests

began to demand refunds for reservations.

But Airbnb had a long time practice

of allowing hosts to set their own cancellation policies.

- But in a world where you have guests fighting back

and saying, "Hosts are not giving us any refunds,

"what's Airbnb gonna do about it?"

I think that really shook the company as well.

- [Narrator] This led to a sudden decision by Chesky

to give guests refunds for certain bookings.

After backlash from some hosts,

Chesky issued an apology to them.

- I am sorry.

I'm sorry we didn't consult you as partners.

And I've heard from you ever since that decision.

- [Narrator] Airbnb said it would pay hosts 25%

of what they would have received for canceled bookings.

They also created a 17 million dollar mortgage fund

to help top rated hosts cover mortgages.

By April the company had barely any revenue

coming in from short term stays.

- So they ended up raising a billion dollars in debt

at a very high interest rate

that is associated with distressed assets.

So overnight Airbnb went from being

the Silicon Valley unicorn

that is a household name around the world,

to being reduced to business that is in distress.

- [Narrator] On May fifth, Brian Chesky announced

massive staff cuts in a memo

that has drawn praise for addressing the impending layoffs

with compassion and clarity.

Chesky said nearly 2000 employees,

a quarter of Airbnb's workforce would be cut.

He also said 2020 revenue would be less

than half of what it was in 2019.

- I think everyone would be very surprised

if they choose to go public later on this year.

What I'm hearing from investors

is that Airbnb would need at least two good quarters

before they go public.

- [Narrator] The pandemic has shifted Airbnb

in fundamental ways.

The company is pivoting to longterm stays,

and recently rolled out cleaning guidelines

to help guests feel safe whenever they do return to rentals.

The sudden collapse of the Airbnb economy

that was a lifeline for many

has also exposed deep cracks in the sharing economy.

- [Preetika] If you think about it,

Airbnb is really a property manager

without the property risk.

Unlike hotels that run and manage their properties,

Airbnb doesn't own any of the properties.

The pandemic has really held a mirror

and has really made us all question

the very fundamentals of the sharing economy.

Who takes on the risk.