SAN FRANCISCO — Last summer, several Airbnb employees wrote a letter to the online room-rental start-up’s founders.
On behalf of more than a dozen employees, they pleaded to be able to sell their Airbnb stock options. Because Airbnb is privately held, its shares cannot be easily traded or cashed in. So the employees also asked that the company go public, a move that would let them freely sell their shares, said five people who saw or were briefed on the document and were not authorized to speak publicly.
The letter was a sign of the tension that has built up among Airbnb’s workers.
According to interviews with more than a dozen current and former employees and investors, most of whom declined to be identified for fear of retaliation, Airbnb’s 6,000-person work force has become increasingly frustrated by not being able to cash in the company stock that was received in compensation packages. Waiting for the start-up to go public has become a growing source of stress, many said, preventing some from making career changes, starting a family or moving on with their lives.
Questions about going public have risen to the top of an internal message board where employees vote for topics for executives to address every few months, the people said. The discontent has been exacerbated because Airbnb, which has been valued at $31 billion, doled out two tranches of employee equity that are set to start expiring in November 2020 and in mid-2021; those shares will become worthless if the company is not trading publicly by then, they said.
To try to keep employees happy, Brian Chesky, Airbnb’s chief executive, and other top executives have made some adjustments, the people said. They began offering sabbaticals to longtime employees, extended Airbnb’s parental leave policy and increased the retirement matching program. They also created a program to provide low-interest general-purpose loans of hundreds of thousands of dollars to employees. In performance reviews this spring, the start-up issued higher bonuses and raises, one of the people said.
On Thursday, Airbnb took the biggest step of all: It released a one-sentence announcement saying it planned to go public next year.
“We are deeply committed to our employees, and our focus on the long-term has helped build a company that is highly successful and true to our mission and values,” Chris Lehane, Airbnb’s senior vice president for policy and communications, said in a statement. He added that Airbnb was consistently ranked as a great place to work “because of the spirit, energy, values and morale of our employees.” He declined to comment on the employee letter.
Vivek Wagle, a marketing executive who left Airbnb in 2014, said Thursday’s announcement “was definitely welcome news for a lot of us early employees, who may have been wondering whether we’d be rewarded for our part in the company’s success.”
Airbnb’s situation illustrates a paradox of the start-up dream. Many tech workers join fast-growing privately held companies with the hope of gaining stock in the firms and converting those shares to riches when the start-ups go public. But employees are dependent on the company’s founders and board before that can become a reality.
Mr. Chesky, who co-founded Airbnb in 2008, has been vocal about not rushing to take it public. In January 2018, he published a letter saying the company will have an “infinite time horizon.” He is now exploring a nontraditional initial public offering by potentially listing the shares directly, or on the Long-Term Stock Exchange, which is backed by venture capital but not yet operational, three people with knowledge of the situation said.
Doug Leone, a venture capitalist at Sequoia Capital, one of Airbnb’s backers, said that while start-ups had “an implied social contract” to go public at some point, there was no rush for them to do so. “The I.P.O. is just a moment in time,” he said.
Yet Mr. Chesky’s go-slow stance has become problematic as other high-profile start-ups of the same generation as Airbnb have started listing their shares on the stock market. This year, the ride-hailing companies Uber and Lyft, the online pinboard company Pinterest and the business software maker Slack are among those that have gone public. That has allowed their employees to cash in their shares.
Employee tension is unusual for Airbnb, known for its cheery mission of “belong anywhere” and for fostering a kumbaya culture among its staff. The company has grown rapidly, with more than seven million listings in 100,000 cities. In the second quarter, its revenue exceeded $1 billion. Many employees work out of an airy building in San Francisco, which features rooms that replicate its famous listings. Several former employees said they were grateful for the windfall they would eventually receive from their shares.
But any reward from owning Airbnb stock has been held back. Starting in 2011, when the young company topped a $1 billion valuation, Airbnb prohibited workers from selling shares, while allowing its three founders — Mr. Chesky, Nathan Blecharczyk and Joe Gebbia — to cash out a total of $21 million.
In its early days, Airbnb paid employees partly in grants of stock options, which allow them to eventually buy — or “exercise” — shares in the company at a low price. Airbnb later began offering a different form of equity compensation, called restricted stock units, which do not need to be bought.
Gabriel Cole, who worked in Airbnb’s food department, said he had spent his life savings to buy his stock after he left the company in 2015. That incurred a $180,000 tax bill, which he couldn’t afford, he said.
“I was returning bottles to buy groceries,” he said. He said he had asked Airbnb’s founders for help and had been told that nothing could be done.
Over the years, Airbnb has extended rules around exercising stock options to make the “golden handcuffs” less onerous. In 2016, it allowed longtime employees who were still at the company to sell portions of their stock. Those who sold had to agree to stricter restrictions on offering any remaining stock.
But those changes did not benefit all of Airbnb’s stockholders. Some current and former Airbnb employees have tried to circumvent the prohibitions by selling their stock on a shadow, or secondary, market for private share sales. In recent weeks, those Airbnb shares have traded as high as $166, which implies a fully diluted company valuation of $52 billion, three people familiar with the secondary market said.
Investment firms have also sprung up to offer loans to former Airbnb employees, using their stock as collateral, in what is known as a “prepaid variable forward contract.” The firms aggressively court former employees, often inundating them with offers for their stock the minute they change their employment status on LinkedIn.
The transactions typically involve a cash loan in exchange for a pledge of shares to a buyer at an agreed-upon price when the company goes public, according to investment offers viewed by The New York Times. The firms charge as much as a 15 percent fee and more for insurance. Former employees who did these deals said they existed in a legal gray area — not authorized by Airbnb, but not explicitly banned.
“Opportunistic brokers and firms push them due to their fat fees,” said Barrett Cohn, chief executive at Scenic Advisement, which works with companies on secondary share sales. “They’re dangerous to buyers and sellers, and expensive.”
When the small group of Airbnb employees sent their letter to Mr. Chesky and other top executives last year, they received no response, two of the people who viewed or were briefed on the letter said.
At the same time, Airbnb took several steps that appeared to signal it was preparing for a public offering. It added independent board members and hired Dave Stephenson, a seasoned finance executive, from Amazon to become its chief financial officer. Current and former employees said they had taken the moves as signs that the company was finally set to reach the stock market.
In January, just before Mr. Stephenson’s first day of work, he was injured in a ski accident, three people with knowledge of the situation said. That slowed Airbnb’s I.P.O. timeline, they said. An Airbnb spokesman said the accident did not have any impact.
On Thursday evening, at an informal gathering of Airbnb alumni in San Francisco, the company’s announcement that it would go public next year was the topic du jour. But the attendees reserved their excitement for when the company officially files to do so, two people who were present said.
Until then, one attendee said in a text message, the general sentiment is “🤷.”