Bogotá — Airbnb’s (ABNB) Brian Chesky says the next tech revolution will be driven by artificial intelligence (AI) as companies in the sector are adjusting to a scenario of market volatility in which “they are going to have to rationalize their businesses”.
He also considered that after the Silicon Valley Bank (SVB) crisis, which shook the banking industry, “people in general can be more cautious by keeping their money in local banks”.
Considered one of the most influential executives in the world, Chesky held a video call with Bloomberg Línea from New York in which he referred to the fact that the business world will be driven by artificial intelligence, which “is going to change everything” and will lead what he considers will be the next technological revolution, in the midst of the global boom that tools such as ChatGPT, developed by OpenAI, are already generating.
“I think AI is going to be as profound for the world as the Internet. Some people say it will be as big as the Industrial Revolution (...) It’s going to change everyone’s life, every company’s life,” said Chesky, who added that Airbnb will use the power of this technology to be more productive, referring to the activities of engineers.
Likewise, he sees artificial intelligence as useful to making customer service more efficient and especially to connect Internet consumers with even more accurate recommendations through algorithms driven by this technology.
“It can do things that basic machine learning algorithms can’t do, so that’s in the short term. However, I’m thinking more broadly. The change coming from AI is just the beginning,” he said.
For Chesky, 41, the current scenario only compares to the time when innovations such as the camera appeared, which went from being a commodity to which few had access to, to an everyday tool.
“Eventually, everyone is going to be able to develop software because it can be driven by natural language, the language you speak. You won’t need to learn computer programming languages, and when that happens you’re going to be able to use it to do a lot more things.”
This is how “software is going to become significantly more ubiquitous,” in turn driving billion-dollar businesses that, according to International Data Corporation (IDC) estimates, accounted for almost $450 billion in 2022, surpassing the $383.3 billion in 2021.
“I think the next thing that’s going to happen is that there’s going to be a big equalizer. Everybody is going to have access to the best we’ve ever imagined. Everybody’s going to have access to a really good doctor. You’re going to have creative people with tools that would have required very expensive labs to be able to produce,” he said.
But on the flip side, he is also aware that AI brings challenges in multiple aspects.
“One of the initial risks is not that machines will destroy us, but that they will imitate us and we won’t know the difference,” he said.
He added that right now there are images online that are generated by AI and not everyone realizes their origin. This may unleash “a crisis, where we’re not going to know what’s artificial and what’s authentic, and I think people are going to crave things that are more authentic, and we’re going to have to balance it all out. So I think these are some of the things that we’re going to struggle with within society.”
What’s next for the tech industry?
Technology companies have been hit in recent months by global market volatility and despite recent rallies, strategists such as Michael Wilson of Morgan Stanley (MS) believe the streak is not sustainable and will return to lows.
The first quarter was marked by the collapse of Silicon Valley Bank (SVB), which triggered panic among investors and mainly startups with funds housed there in the face of a possible domino effect.
The crisis in Silicon Valley, the global center of entrepreneurship and venture capital investment, led the Federal Reserve to analyze a plan to strengthen banking supervision in the US, according to Bloomberg.
The whole situation was also set against the backdrop of the challenges faced by companies in an adverse economic context marked by high interest rates implemented to contain the great inflationary wave generated after the pandemic.
This led to staff cuts at several of the largest companies in the sector, touching even the accommodation platform Aibnb, which had remained one of the few tech companies to have avoided mass layoffs.
In March, the San Francisco-based platform laid off 30% of its hiring staff, 0.4% of the total workforce.
Still the company recorded its first profitable year in 2022, with a profit of $1.9 billion.
The platform’s CEO assured that they have not made aby mass layoffs since 2020, and that in the current context they have no intention of making staff cuts.
“The company is very profitable. We generated $3 billion in free cash flow in 2022. We are very lean. We have 5% fewer employees and 75% more revenue than before the pandemic,” he said.
Earlier this year, the company reported that bookings within the platform in Latin America increased in the fourth quarter of 2022 on a year-over-year basis, beating Wall Street analysts’ expectations and reflecting a strong rebound in travel demand.
Overall, Chesky noted that markets are shaking out and “there are a lot of late-stage private companies that are not going to be able to raise money at previous valuations. They’re going to have to rationalize their businesses.”
Chesky said that SVB’s collapse “says more about banking than it does about technology,” referring to possible lessons for the industry.
“I think it’s a failure of banking as far as I can see. It is not a failure of the technology industry (...) I think people in general can be more cautious by keeping their money in local banks”.
The problems with tourism
Regarding tourism, Chesky pointed to the opportunity it will represent for Latin America in the next decade, especially for markets such as Colombia, where President Gustavo Petro has said that this sector has the potential to generate a flow of foreign currency as representative as the extractive industries.
Among the challenges to the sector howeber, Chesky mentioned that in order to earn revenues from tourism a country has to make significant investments, and that usually the companies that benefit are multinationals rather than local firms.
A third challenge is that “tourism is often concentrated in certain districts, especially hotel districts”.
For the above reasons, he defended the changes that the collaborative economy is producing in the tourism industry compared with traditional models.
Housing costs: the ‘Airbnb effect’
Chesky also referred to points that have been raised regarding the alleged effect of Airbnb on the increase of housing prices in emerging markets such as Latin America, where high-income buyers are acquiring homes in strategic areas to invest and generate extra income through these platforms.
“The increase in housing prices is a product of the demand of a high-level economic group that is interested in living in the ‘gentrified’ sector,” urban architect and professor at the Faculty of Architecture and Design at the Universidad Javeriana, David Burbano, told Bloomberg Línea.
Questioned on this subject, Chesky went back to the origins of the business in 2007, when he and his business partner Joe Gebbia rented their own apartment in San Francisco so that people arriving in the city for the World Congress of Industrial Design could stay at a time when hotels were full.
“The reason I tell that story is because we want to make housing more affordable when possible,” he said in the interview.
He justified that often cities “adopt regulations that include registration systems that typically limit the number of nights you can rent on an Airbnb,” and in these cases the company tries to arrange solutions.
“We want to be part of the solution, not part of the problem. We want to strengthen communities. Airbnb started as a way to help ordinary people earn supplemental income from the biggest asset they have in their life, their home. I’m hopeful that Airbnb is helping people pay their bills,” he said.
The company has also been questioned in recent times over reports about hidden cameras in locations listed on the platform, something Brian Chesky deemed “a very serious issue.”
“We have zero tolerance for hidden cameras. If we ever find someone, we will remove them from the platform and report them to the authorities,” he said.
Airbnb announced changes to the platform to promote the rental of rooms rather than houses, which includes vivibility of the full price (before tax), check-out instructions, maps and new privacy functions.