Airbnb to employees: 'We failed you' with controversial ads

The home-sharing company apologizes to employees for a marketing campaign that angered San Franciscans, CNET has learned. "You were right to feel this way," CEO Brian Chesky tells disappointed staff.

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Airbnb, co-founded by CEO Brian Chesky, launched an ad campaign earlier this week that angered some San Franciscans.

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San Franciscans chastised Airbnb this week for a controversial marketing campaign that offered the city advice on how to spend tax dollars it's collecting from the apartment- and house-sharing service.

It turns out Airbnb's top executives agree with the criticism.

On Wednesday, the company unveiled ads that suggested at least three different ways San Francisco might spend its tax payments. San Francisco officials said in February that Airbnb had met its responsibilities for back taxes and penalties "in full" after failing to pay the city's 14 percent hotel tax for several years.

One of Airbnb's ads read, "Dear Public Library System, We hope you use some of the $12 million in hotel taxes to keep the library open later." Another said: "Dear Parking Enforcement, Please use the $12 million in hotel taxes to feed all expired parking meters."

Shortly after the billboards and bus stop posters went up, however, the San Francisco startup apologized to the public and promised to take them down.

On Thursday, CEO Brian Chesky acknowledged the company's failure to Airbnb employees, according to internal emails seen by CNET. "Yesterday I heard from so many of you about how embarrassed and deeply disappointed you were in us," Chesky wrote. "You were right to feel this way."

Chesky's note was in response to an email from the company's marketing chief, Jonathan Mildenhall. "Yesterday, we failed you, our community, our brand and our hometown," Mildenhall wrote. The ads were "fundamentally inconsistent" with Airbnb's corporate values, he noted, adding the company is looking for ways to "work with the organizations we've wronged to make this right."

Airbnb declined to comment on the emails, but a source close to the company confirmed their authenticity to CNET.

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The ads touched off a wave of anger on social media.

San Francisco State University professor Martha Kenney did the math in response to one of the ads' cheeky suggestions that Airbnb's tax payment could be used to keep libraries open later. "I'm happy to hear that you paid your taxes this year. I did too! Isn't it awesome? However, I've crunched some numbers and I have some bad news for you," she wrote on her Facebook page. "I doubt that your hotel tax can keep the libraries open more than a minute or two later."

The ad snafu comes as San Francisco gets ready to vote on Proposition F, a measure on the November 3 ballot. The initiative would, in part, cap short-term private rentals of homes and apartments in the city to 75 nights a year.

Founded in 2008, Airbnb now operates in 190 countries and has more than 2 million listings. It's battled regulators, unions and housing advocates who see the service as either unsafe or responsible for tightening housing markets, with landlords taking units off the market to capitalize on short-term rentals instead.

Cheskey said when the ads were first released, people thought they were a hoax. "No one thought we were capable of such a thing," he wrote. "No one ever should."

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