Some Airbnb investors reportedly want to oust CEO Brian Chesky, blaming him for spiraling costs and a 'hasty' move to give full refunds on coronavirus cancellations

• Some of Airbnb's investors want CEO Brian Chesky to step down, The Wall Street Journal reported.
• When Airbnb went out to raise money recently, some existing shareholders refused to invest unless Chesky was out or he hired someone to help him turn around the company.
• Some investors and board members are upset about Airbnb's spiraling costs, including its money-losing Airbnb Experiences project.
• Board members were also upset with Chesky because he didn't alert them before he decided to overrule the policies of its property manager partners and allow guests to get full refunds for coronavirus-related cancellations.
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Some Airbnb investors are calling for CEO Brian Chesky's head, according to The Wall Street Journal.

When the company recently went out to raise money to help sustain it during the coronavirus crisis, some of its current shareholders refused to participate unless it replaced Chesky, one of the Airbnb's founders, in the top job, The Journal reported. Some investors alternatively called for Chesky to reduce his voting control over the company or to hire a turnaround expert to help stabilize the company's business, according to the report.

Company spokesman Nick Papas denied the report.

"Nothing of this sort was ever communicated to the company or our advisers at any point in time," he told Business Insider.

Airbnb announced earlier this week it raised $1 billion from Silver Lake and Sixth Street Partners. Chesky didn't step down, but the new funding came with other significant costs. The money came in the form of convertible debt on which Airbnb will pay more than 10% interest. And the funding pegged the company's valuation at $18 billion, or about $13 billion less than it had been in 2017 at the time of its last funding round.

Even before the coronavirus crisis started to slam Airbnb's business, some investors and board members had grown increasingly concerned about Airbnb's spiraling costs, the Journal reported. The company lost $674 million in 2019, after losing less than $100 million the year before, as its expenses jumped to $5.3 billion, according to the report.

Airbnb Experiences is losing money

A group of board members led by Kenneth Chenault, previously the CEO of American Express, Ann Mather, a former Disney executive, has pressed Chesky to kill Airbnb Experiences, a program through which travelers can book tours in the places they visit, according to the report. That initiative has lost almost $1 billion since it launched, the Journal reported; a company representative told the outlet the the losses were a "small fraction" of that.

Papas denied that Airbnb's board had called on Chesky to shut down the program.

"Our board has encouraged us to invest in experiences," he said.

Instead of cancelling the program, Airbnb touted it as one of the company's key initiatives going forward.

Chesky also drew ire from board members when he decided to allow travelers to get a full refund for any coronavirus-related cancellations, according to the Journal. The move overrode property managers' individual cancellation policies and largely came at their expense, upsetting many of them. Airbnb's directors were irked, because Chesky didn't alert them to the policy change before announcing it, and some thought the move was "hasty," according to the report.

Papas denied that the board wasn't informed about the change to the cancellation policy.

"The leadership team and the Board had extensive discussions on this matter," he said.

The spotlight on Chesky comes as Airbnb is trying to survive the economic hit that's been inflicted on it by the pandemic. Weekly bookings on its service dropped by 80% from the beginning of March to the end of the month, the Journal reported, citing data from AirDNA, a market research firm. Meanwhile, AirDNA has previous reported that 90% of reservations that were due to begin in recent weeks have been cancelled.

Despite the new fundraising, Airbnb is reportedly seeking yet another infusion of cash. The company could run out of funds in as little as a year, according to a Business Insider analysis.

Got a tip about Airbnb? Contact Troy Wolverton via email at twolverton@businessinsider.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.

• Read more about Airbnb:
• Airbnb's losses swelled to $674 million last year, even before the coronavirus crisis crushed its business
• Airbnb could run out of cash in one year, even with the $1 billion it just raised, because of how devastating the coronavirus is on its business
• Airbnb could boom after the coronavirus downturn, assuming it survives the crisis
• Airbnb's hosts aren't impressed with the company's $260 million package to make up for coronavirus cancellations. 'People see it for what it is - it's PR.'

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