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Story by Steve Mollman — fortune.com — The pandemic hit Airbnb hard. The company lost 80% of its business in March 2020, and people were questioning its ability to survive. Barely two months into the pandemic, it laid off about 1,900 people, or a quarter of its employees. Fast forward to today and not only did it weather the crisis, but in June Airbnb made its debut on the Fortune 500 list of top U.S. public companies by revenue, coming off its first-ever profitable year. \ The turnaround wasn’t easy. Airbnb had to completely reorganize itself. “We shuttered most of the divisions,” CEO Brian Chesky said on a Wednesday episode of The Social Radars podcast. That move was something Airbnb needed to do anyway, he said—as do many startups that have grown into larger organizations, he believes.
For a startup, he explained, it’s tempting to “divisionalize” in order to move faster, since decision-making can become a bottleneck at the top of the organization. But while that might work at first, he added, in the long run it can slow a company down. The problem that the pandemic forced him to face, he said, was that “we had this culture where everyone could do anything. People could own their own projects.” There were too many divisions, or “fiefdoms,” he said, such as ones focused on luxury, pro hosts, a magazine, transportation, and so on. Airbnb had followed a common line of thinking in Silicon Valley, he said. It goes like this: “Basically you share the values of the company, you democratize data, you hire smart people, and you assume that they’ll make the right decisions for the company.”
But, he added, “that is all wrong. It sounds great, and it’s right for some people, but it was wrong for us.” Chesky studied how Steve Jobs revamped a struggling Apple when he returned to the company he’d cofounded, noting how he “shuttered most of the divisions, and he went from a divisional structure to a functional structure.” Adopting a similar strategy, Chesky got rid of the unnecessary divisions at Airbnb. A few core ones would remain, but from then on, he said, “Everyone’s gonna work on everything together. There are no longer swim lanes. There’s one road map, and no one ships anything unless it’s on the roadmap. And then I’m gonna review every single thing in the company before it ships.”