Every S1, the stock market prospectus that American companies use to go public, is required to give mountains of numbers and disclosures that uncover the company’s financial and legal state. But really, what it tries to do is tell a story.
In March, Airbnb’s S1 was mostly written. Put together in the months after Uber’s troublesome flotation, WeWork’s disastrous attempt to go public and the struggles of newly listed online mattress retailer Casper, its story would be of a company different from those that had come before it. Bankers aimed to paint Airbnb as the Amazon of travel: its short-term rental business augmented by booming businesses such as experiences, in which tourists paid out for vineyard tours or comedy nights.
Airbnb shares were trading hands privately at a valuation of almost $40bn (£30bn). Employees at the company, some of whom had been sitting on stock options for almost a decade, were anticipating a payout that could make them millionaires.
For Brian Chesky, 12 years of hard work was coming to a crescendo. “We had a plan, what I thought was a clear life plan,” Chesky, Airbnb’s co-founder and chief executive, later told a podcast.
In mid-March, that plan fell apart. People were barely leaving their houses, let alone travelling. While much of Silicon Valley enjoyed a Covid-induced boom as lockdown families resorted to Zoom, Netflix and Facebook, Chesky was left scrambling to save his company.
Not only did travel bookings plummet, but millions of guests started demanding refunds, forcing Airbnb to intervene in a standoff between guests and its millions of landlords. The company was forced to lay off a quarter of its workforce, almost 2,000 people. Revenue was projected to drop by 50pc in 2020.
The company was forced to take $2bn in emergency loans, charging interest rates of more than 10pc. Share warrants included as part of the deal valued the company at just $18bn. Forget about going public; the company’s survival was on the line.