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Comment by slg | Hacker News Reader

No mention of how this business was built on the back of people running illegal hotels. It wasn't hard work or passion that allowed these guys to become billionaires. It was finding a niche in the market that was regulated out due to a combination of valid consumer safety concerns and regulatory capture, targeting that market, ignoring the law when it didn't suit them, and getting large enough by the time the law caught up it was no longer politically feasible to kill the company. It is the same process that other tech companies have gone down such as Uber.

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With the sad result of contributing to rent inflating well beyond peoples' means. We are in the midst of a pretty grim housing crisis. Almost 70k homeless in LA. This doesn't make anyone involved a bad person, but we must recognize how this company has contributed to a structural crisis. Can't say I know the solution myself, but.

Housing in LA/SF is not expensive because of Airbnb or “evil Chinese investors” or any other random boogieman the media is trying to scare you about.

I’d put them near the bottom of the list of “things that make housing expensive.”

At peak, there was about 20-40k listings in greater Los Angeles on Airbnb.

There’s roughly 19 million people in greater LA. Average household size in the US is 2.6 ppl. Let’s round up to 3 and be generous.

That means there’s roughly 6.3 million households in greater LA. Even if 100% of those Airbnb’s are suitable as full time residences (its probably more like 30%), the 20-40k units wouldn’t even cover a single year of newcomers to greater LA (yes, the core is shrinking but the greater metro is growing).

The main (key word) reason housing is expensive is due to geographic and local government restrictions on zoning and development which chokes off supply relative to the number of people who want to live there. Not some silly web app for millennial travelers.

I really appreciate the use of math here for a sense of scale. That said, this analysis overlooks the relationship between supply and demand on price and availability. Because housing is relatively supply inelastic a small increase in demand can drive large increases in prices. That said I think it is a valid point that the current housing shortages in the US are caused by bigger forces than 100 billion dollar company. Long term policy initiatives at the local, state and federal level have all contributed to the skyrocketing cost of housing, and these should really be higher priority than hotel zoning reform.

Thank you. Anyone who looks at the numbers can see that AirBnb is not affecting housing availability in any meaningful way.

There are about 6 times more permanently vacant units in SF than the peak number of AirBnb, and the amount of construction that has been blocked during discretionary review (met the zoning requirements, people complained about parking) since AirBnb's existence far exceeds the AirBnb units too.

(I am in favor of vacancy taxes, a house being used, even by a short-term renter, is better than the blight caused by properties sitting empty)

Housing prices are set on the margin. 20k to 40k units coming online for sale immediately would have a material impact on prices.

A corollary to this: a stock price can double with only a relatively small number of shares changing hands, proportional to the total number of existing shares.

Comparing the number of Airbnb units to the number of housing units citywide can lead to the wrong implication, even if that percentage is low.

Certainly it would, temporarily. Like placing a large buy order on a stock. But prices would quickly normalize since it would be a one time thing. Supply would quickly tighten up again and prices would resume the march upward.

And even the short term downward price pressure wouldn’t affect prices by much. We’re not talking the 50%+ drops that would be needed to make housing in the area “affordable” relative to incomes—-as it was for at least half of the last century.

Also important to remember, many of those Airbnb’s would not be legally zoned for permanent occupancy.

In addition, homelessness is mainly a result of mental health issues (not entirely, ok) - and not housing prices.

And many homeless come to LA and SF from other areas that are not as friendly to the homeless. Which is why there are a lot less in Dallas suburbs than downtown LA.

You are pretty reductive in your description of homeless people. Sure, some people end up in that situation because of mental illness or move to these areas after already becoming homeless, but that is not the majority of homeless people.

>L.A.H.S.A.’s 2019 homeless count found that 64 percent of the 58,936 Los Angeles County residents experiencing homelessness had lived in the city for more than 10 years. Less than a fifth (18 percent) said they had lived out of state before becoming homeless.

>More than half of the people surveyed in Los Angeles cited economic hardship as the primary reason that they fell into homelessness.

https://www.nytimes.com/2019/11/06/us/homeless-population.ht...

1. Ngl, that is less than I expected. Doesn't mean it's not a big factor.

2. Citations needed

3. What empirical evidence do you have for your claim that the problem is zoning.

Airbnb enabled a great range of people to see places they might have never afforded to see before. It managed to commoditize travelling in a similar way low-cost airlines did. On top of that, it enabled regions with no previous tourism revenue to have a slice of the cake. Sure, the company made a good profit while there was a profit to make, but their service benefited consumers as well and I think it did leave a positive impact not only on the travellers but also on some of the communities that understood how to balance its pros and cons.

> Airbnb enabled a great range of people to see places they might have never afforded to see before. It managed to commoditize travelling in a similar way low-cost airlines did.

By running illegal hotels. It's easy to be cheaper when you're breaking the law. The whole thing is a criminal enterprise: without the crime, none of the rest of it works.

> Sure, the company made a good profit while there was a profit to make, but their service benefited consumers as well and I think it did leave a positive impact not only on the travellers but also on some of the communities that understood how to balance its pros and cons.

It benefited their clients at the expense of the surrounding communities. Even if you think the laws those communities set weren't in their interests, they were the legitimate laws of those places. The price of living in a society is respecting the law even when you don't agree with it, and AirBnB et al have been tearing that apart for the sake of their profits.

It also created a market that pushed prices up in residential zones in major cities, kicked out neighbors and screwed up the rental market. For example, in my city, rental offers for residents almost duplicated when COVID hit due to AirBnB rentals being empty. If we're talking about people not affording things, we need to focus on people not affording housing before tourism.

> some of the communities that understood how to balance its pros and cons

AirBnB worked against a lot of those communities that tried to balance the pros and cons

https://www.wired.com/story/inside-airbnbs-guerrilla-war-aga...

I know a guy who airbnb out one of his apartments he rented so he live in a larger nicer apartment. Feels bad that people did that.

I think Airbnb when it first came out was great. Like all things tech (a bit broad of a statement) once it got out into the world in a real way it lost its allure. Facebook was great when it started, reddit, instagram, google, etc. Once people figure out how to co-opt the technology for their own uses (or maybe just the drive for ad revenue kills off all the fun or novelty wears off) it loses its lustre quite a bit. Sorry to be downbeat - technology doesn't feel as fun as it was even like 3-4 years ago let alone back in the 00s or the 90s. Or maybe I'm just aging out.

I feel the same way in the sense that I'm much more cynical about tech than I used to be.

I take solace in the fact that writing code and building things (especially physical world things!) is fun. Web backend is getting duller by the minute, though.

Agree with this. I do get enjoyment out of writing and executing code. Is that just dopamine rewards - I can’t tell.

I guess it’s VC demand for returns. Bootstrapped tech and tech that only takes a small amount of investment doesn’t have to follow this path.

That's a great hack and good for him. It won't last forever.

I live in a huge AirBnb market relative to city size (for scale, the city is 400k people, and we have had more peak listings than the capital which is a huge tourist city itself of 15m people)...it has destroyed the community here. Totally. Every spare of piece of land is built on because properties were converted overnight (against local regulations), aggressive rental practices that you only see in larger cities became commonplace (small three bedroom flats are being broken up into six bedrooms), whole areas of the city are now deserted most of the year, properties lying empty with homeless people lying in the doorstep. I used to live somewhere that was full of families and young people, every single flat in the block is now AirBnb...bar one, which is occupied by a 91-year old woman whose husband recently died of cancer and can't move...she gets treated as "the help" by angry AirBnbers (she has people trying to get in her apartment, ringing her door late at night, etc.) but...

...I don't think that is what angered people. That was bad. But AirBnb not only circumvented the spirit of local laws (taxes being one example), they actually assisted property owners in breaking laws. Not just the spirit of the law. Not just a weird loophole. Because we had a big rental market before AirBnb existed, we had laws that existed for every eventuality but one assumption was that holiday rental companies would comply with local licensing laws...AirBnb refused. So we had a local council, budget cut 70% by central government, having to make the choice about whether to cut care services to disabled and the elderly or cut back on road maintainence, having to employ people to look at listings online and work out where properties were for licensing. Needless to say, that didn't work (the story has a happy ending, the council is introducing fines that will bankrupt property owners for failing to comply, is banning listings altogether in some cases, and has said that more severe measures if neither works).

That is why AirBnb is successful here. People often complain about hotels or the lack of regulations...where I am: every single city had regulations for holiday rentals. AirBnb ignored all of them. AirBnb didn't invent tourism, we had them before and we will have them after, they didn't lead us to become richer. A small group did, everyone else became poorer. And this is a case of a company that only exceeded competitors in its willingness to break and ignore rules, and assisted others in doing the same. I will invest in O&G, miners, social media, gun manufacturers, I don't care...they are just filling a need. Never AirBnb. Even grouped amongst companies doing shitty things (palm oil, payday lending being two that occur immediately), they are definitely up there.

I am one of those people, AirBnB enabled me to travel the world, especially to places I would have never thought to go because I always could fall back on AirBnB for support (and I have, as lousy as it sometimes can be)

> Airbnb enabled a great range of people to see places they might have never afforded to see before.

Hostels have always been cheap. And most of the time, AirBnB is more expensive than a hotel when you include their "cleaning fee". It only works if you have a large party or you're staying someplace a while

Same thing happened with many of the first car manufacturers, electricity providers (Edison getting localities to ban alternating current), etc.

In many areas the Airbnbs were not illegal, and sometimes "regulatory capture" should be fought as unjust.

Of course, in other areas, you're totally right that sometimes the local regulations should win, the company fined, etc. All depends on what the local community wants, imo.

>sometimes "regulatory capture" should be fought as unjust.

The problem is that Airbnb was the one deciding what laws to ignore. Odds are the group of laws they considered regulatory capture were much bigger than the group of laws that were considered regulatory capture by consumer protections groups. There is not a clear delineation between what laws truly protect people and what laws only give that appearance. The proper way to fight regulatory capture is through the political system.

The "It's easier to ask forgiveness than it is to get permission" mindset can be dangerous when it is applied to issues of public safety.

All I know is that Airbnb has made a positive impact on my life. I've been able to go on several trips and stayed in some really great places that I wouldn't have been able to without it.

As a college student it allowed me to attend conferences that I wouldn't have been able to afford, take trips with friends, etc. and as a working person I would still choose it over a hotel many times.

Hotels are expensive, with lots of hidden fees and very little innovation. I'm glad they found a loophole, I think hotels shouldn't be as regulated as they are.

If they didn't have a semi-legal business model, someone with a lot of money would have eaten their lunch already. By being in a gray area, they can avoid competition from the publicly traded behemoths. After all, AirBnB isn't that hard of a website to copy. Facebook could have ripped the whole concept off, if they wanted to get into that business, in about 2 months.

There is no legal business there to be had with such returns. The website, indeed, was trivial. It was also not how AirBnB made money. They made money by enabling and encouraging individuals to make money illegally.

I always tend to check airbnb options nearby before booking a hotel. I almost never find a cheaper option through Airbnb. At least that is comparable in quality to the hotels I would be interested in.

They are also scrupulous tax avoiders in the UK. Pay your fair fucking share.

If a tax scheme is poorly designed and has loopholes, the correct way to solve the problem is to redesign said tax scheme and close the loopholes.

Not to complain about individual actors following the schemes that you set up.

Why do you feel Airbnb should voluntarily donate money to the government beyond what they are legally required? How much should they donate? Will all other companies be required to provide this donation, or just the high profile ones that upset you?

There will always be loopholes.

Companies don't HAVE to create a double Irish dutch sandwich, creating webs of companies that loan IP to each other and other such nonsense. They make a choice to do this. This isn't about them overpaying or "donating". This is about them doing the right thing.

https://www.theguardian.com/media/2020/nov/28/netflix-to-sta...

They can do the right thing. They just choose not to.

You see that's the difference between you and I.

I don't view countries as representations of righteous morality, I view them as market participants, no different than you or I or a corporation or a financial institution is a market participant. Speculators with legitimate reasons to stuff their coffers.

There are many people and organizations like me, and make no mistake, the other countries around a country thinks the exact same way.

When a country cannot reach consensus on how to tax, that is a prison of their own creation. When a coalition of countries cannot reach consensus on how to curb behaviors they don't like, that is also a prison of their own creation.

They are in competition with each other.

Some of us are playing by a set of rules that recognizes that, it is also a more effective set of rules.

You do realize how laws are being made and how loopholes find their way into tax codes? States are not individuals, you cannot treat them like a person, just being to dumb to do what's good for them. They are run by many people everyone of which having their own profit motives. So it is very easy to lobby them into doing stuff detrimental to the general public.

It is much easier for a company run by its founders to act morally. Airbnb does not, which to me is not the end of the world, but worth pointing out in thread about how great those founders supposedly are.

Suggesting that it is just the state's fault is a naive view.

I understand that and it reinforces my opinion, lobbying works because representatives and sometimes officials with unilateral control are told to do things because they are too dumb to do what's good for them. That is lobbying, the word used when you respect that particular country, or corruption, the word used when you don't respect that particular country. In my experience across jurisdictions, the process is analogous.

The obvious answer that you haven't accepted is that, in this conversation, you are a diver surrounded by amoral sharks.

We all view and see the gradient of relativity and are not swayed by your arguments. The consequences guide the actions, and a municipality's hotel tax or zoning laws are the toothless kinds of laws, so toothless that it isn't even worth bothering to change them. Did you see how gig apps lobbied with push notifications against California laws and referendums and court rulings? Because of the consequences.

It’s pretty easy to see that expecting people to do “the right thing”...when you have poorly defined what “the right thing” is...will result in problems.

The Irish Dutch sandwich would cease to exist if governments wanted to stop it. It’s the responsibility of the people to vote for politicians who aren’t corrupt and will make laws to properly represent our intentions instead of enriching their buddies.

It’s not the companies fault, they are simply following the incentives. All companies have competitors, and if you design a loophole, the nature of competition will force all companies to follow it. Lest your competitor gain a profitable advantage.

Fix the game and players will follow the new rules overnight.

You are personifying "the people" or "the state". Your argument does not make sense. Everyone has their ownn priorities, resulting in this situation. Not all politians are corrupt, it is just very hard to change things if all the money is so overwhelmingly against it and the topic is not big enough to really enrage the public.

In a representative democracy, the people and the state are the same thing.

So effectively, by not caring enough to close these loopholes, the people have sanctioned this behavior as okay.

You personally may disagree with it, but apparently a majority of your countrymen do not see it as a big problem. Otherwise it would already be solved.

> will make laws to properly represent our intentions instead of enriching their buddies.

Buddies like... the companies that use those loopholes.

> if you design a loophole, the nature of competition will force all companies to follow it

Does it also force them to lobby to keep that loophole?

> Lest your competitor gain a profitable advantage.

Is the differential value of Airbnb using tax loopholes? Do you mean to say that if Airbnb stops using tax schemes, a competitor will pop up and be in an advantage?

> Fix the game and players will follow the new rules overnight.

Players will complain and try to lobby and even blackmail governments trying to fix the game, and will also actively try to find new loopholes.

Really, we need to hold companies accountable for these schemes. It's very hypocritical to praise the grit and the motivation of the founders but consider the company an abstract and amoral entity whenever it comes to things like paying taxes. Stop excusing bad behavior.

Write tax laws that are clear, simple, automatable and enforced. Then people will pay tax.

Complicated tax laws beget complicated tax dodges. At this point no one in the UK or US or many other countries is able to answer a simple question like "Has this company paid the amount of tax we intended?" It's all gray areas, and it's all your fault, not the foreign companies'.

That is a bullshit argument, even when writing code, there are bug's in it. And if you exploit a bug to gain access to something that you don't have access it does not magically make it your's. the same if you found a way to open the door of the house you cannot say it's my house the door had a loophole. Most of those loopholes are exploitable only with a setup that those multi billion international companyes have access to. It's one thing to to take care of you own set of taxes you have to operate in a international context.

Whoever heard of paying back to a country that helped you get rich! Nonsense, Sir!

Do you not take any legal deductions on the taxes you pay? I'd imagine you are a tax avoider too.

Do you not legally cheat on your significant other? I'd imagine you are a cheater too.

Can anyone explain to me why I am being downvoted for this? It was not a direct assault, only a statement to try to show deficiency in an argument. If it needs to be edited to seem such as, please let me know how it could be better worded if you see merit in the argument.

IMO its in the public's interest to not suffocate startups. different story now that they've IPO'd.

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