Warren Buffet advises Brian Chesky to ‘get rich slow’, Airbnb IPO

Many years ago, investment icon, Warren Buffet advised Airbnb CEO Brian Chesky to “get rich slow”, over lunch. On Wednesday, the Airbnb CEO ignored the advice and filed for an IPO to speed things up a bit.

In 2013, Buffet had a lunch meeting with Amazon CEO Jeff Bezos and Airbnb CEO Brian Chesky. During a conversation, Bezos asked Buffett why his investment strategy was hardly used by anyone else despite being simple. Buffett responded, “Because no one wants to get rich slow,” according to Chesky in a 2013 PandoMonthly interview.

In 2017, the Airbnb CEO acknowledged the wisdom behind Buffett’s “get rich slow” approach saying that “nothing about Airbnb was slow.” However, since its nine years of being operational at that time, it was necessary for the company to “go a little slower and take a little bit of a breather and be a little more thoughtful.”

Nonetheless, Chesky believes that deliberately slowing down the growth of a fast-growing company may not be as efficient as expected.

“Getting rich slow isn’t actually slower. It’s slower in one year, but might be faster in seven years,” he said.

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Attempting an IPO

Airbnb has recorded its worst period ever following the impact of the coronavirus pandemic on the business. Chesky and his other co-founders are attempting to have an initial public offering amid the pandemic.

In May, Chesky wrote that there was a huge possibility of the company’s revenue plunging by more than 50% this year. The company reacted by slashing costs, laying off 1,900 employees, or 25% of its global workforce, and raising $2 billion in capital.

The company also had to refund customers who had no other choice but to cancel their trips, setting aside $250 million to reimburse hosts who lost bookings. In June, bookings rebounded but were still 30% down from a year ago, according to Bloomberg News.

Airbnb said that on July 8, more than 1 million nights were booked by customers, making it the first time booking would hit that level since March.

The main reason for having an IPO now is yet to be disclosed. Some experts suspect that it could be pressure from the company’s employees to go public as soon as possible to take advantage of lucrative stock options before they expire, according to the Wall Street Journal.

Another possible reason could be the swift recovery of the stock market as both the S&P 500 and Nasdaq closed at high records early last week.