Silicon Valley Braces for Belt-Tightening

At Airbnb’s board meeting two weeks ago, one topic took center stage: how to contain accelerating costs. It is a question that until relatively recently received scant attention inside Silicon Valley’s big-name startups. But a string of rejections by the public markets of some of the tech industry’s superstars has prompted companies once primarily concerned with rapid growth to take a closer look at their spending.

Airbnb racked up heavy losses in the first half of this year as it spent heavily on marketing and adding employees. While it recorded a big profit in the third quarter, three people familiar with the matter said, the rest of the year might not make up for the early performance. It isn’t clear whether Airbnb will make cuts, but investors have increasingly been scrutinizing the company’s high overhead expenses as it prepares to go public next year, two of the people said.

Other startups already have taken steps to tighten their belts. Opendoor, a home-buying service valued at $3.8 billion, dramatically slowed a planned expansion to new markets this year, and its CEO has talked publicly about trying to be more frugal. Mattress maker Casper, which is likely to go public next year, recently trimmed staff to conserve cash. The changes, described by people close to the companies, haven’t previously been reported.