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Comment by conanbatt | Hacker News Reader

What I dislike the most about Airbnb's whole controversial business model, is how the true innovation they did was bypassing laws.

As property listing sites go, Airbnb did not produce any true innovation. And although they clearly must have done some things really well to generate so many people using their service(a.k.a. probably taking them out of craigslist), the really true 'innovation' they did was getting away from abiding regulation.

Now that they are big, they are going to cooperate as much as possible to build regulatory walls so that another Airbnb wouldnt be able to show up and contest those rates.

I have the same feeling from Uber/Lyft. The traditional taxi service is terrible for drivers, and they present true benefits to them: but only because they found a way to bypass the law by paying with the apps instead of giving money to the driver. (If I made a site on my own, and picked up people from the street and the gave me money in hand, i would be breaking the law).

Now that they are big enough, they can also influence the rules enough to make it harder for future competition.

These strategies can only work when the companies get big enough to influence the law making, or when they have such a strong market dominance(or monopoly) that they can now afford to abide by the rules (or to make them).

So, in terms of Airbnb , the only innovative thing they did was finding a law loophole. Woohoo.

View on HN

I think you could make a similar argument for YouTube, but I personally find all of these services to be tremendously valuable and I'm glad that they are working to evolve the law.

Laws are written and interpreted within the context of old, established businesses. Innovation will inevitably produce a certain amount of tension with those old laws. One approach for to dealing with this is to ask permission / change the law first, but that will usually fail because the incumbent businesses generally don't like change (imagine trying to get Hollywood's permission to launch YouTube). The second approach is to move forward within the spirit of the law, deliver genuine value to consumers and society, and then work with legislatures and the courts to develop improved laws and understandings of the law.

First, the YouTube comparison is far less appropriate than you suggest. The Digital Millennium Copyright Act contains a safe harbor that is designed to shield internet service providers from liability associated with copyright infringment provided that they meet certain criteria. The U.S. Court of Appeals for the Second Circuit determined that YouTube was protected by this safe harbor.

Second, and more importantly, you seem to neglect the fact that some AirBnB hosts are not just violating laws, but their leases and HOA rules. These are legally-binding contracts between private individuals.

AirBnB's most ardent supporters like to focus on zoning and hospitality laws, suggesting that they're antiquated, anti-competitive, etc. Some of these arguments are quite reasonable in my opinion, but what about private contracts? I have yet to see convincing arguments around the issue of hosts who are violating their contracts with their landlords and/or homeowners associations.

Most apartment leases have strict terms around subletting and many HOAs have restrictions around property use that would be in conflict with AirBnB-style short term rentals. Even if AirBnB doesn't have a legal obligation to help enforce these, given the number of listings that are ostensibly governed by leases and/or HOA rules, it seems implausible that AirBnB isn't aware that a good number of its hosts are breaking private contracts, potentially exposing those hosts, their neighbors and even their "guests" to a variety of risks.

Does AirBnB not have a moral obligation to address this? I'd love to see more AirBnB supporters take on this issue. At least it would be more entertaining and perhaps even more enlightening than the recurrent arguments against zoning and hospitality laws.

Why is it Airbnb's job to police their listings for HOA and lease violations?

Surely that responsibility is the host's.

I was expecting a response like this, and it completely misses the point of my comment. Notwithstanding the potential benefits to hosts and guests in ensuring that activity on AirBnB is above board, I focused on a simple question: even if AirBnB doesn't have a legal obligation to help enforce private contracts, does AirBnB not have a moral obligation to address the issue because it is almost certainly aware that a good number of its hosts are violating them?

It seems like your response is "AirBnB has no moral obligation to try to discourage its hosts from violating an agreement it knows likely exists", but I'm curious as to why you chose to throw this back to me as a question rather than stating a concrete opinion. Do you hold other companies to this same standard, and are you comfortable stating on record that what's good for the goose is always good for the gander? If so, why disguise your opinion as a question?

On the point of corporate morality, I'd note that companies in certain industries are frequently lambasted for acting amorally. Just look in finance. Big banks, mortgage lenders, hedge funds, high frequency traders. They face almost constant criticism for engaging in behavior or failing to prevent behavior, even when their actions do not violate the letter of the law.

Are there no AirBnB supporters who have criticized other companies for amoral behavior?

At least, with the finance industry, those entities are directly perpetrating and in control of the immoral behavior, rather than acting as a proxy/facilitator for entities that might be doing it. I would think this situation is more akin to hosting copyrighted content, where we're finding that service providers aren't held liable (morally or legally) as long as they comply with requests to take down specific offending material.

As a side note, look how often that criticism of the finance industry amounts to any real effect on those companies. If that's the model we're looking at, the prevailing wisdom says to just do it and ignore the critics.

Also I think most people just aren't that concerned about the sanctity of HOAs and residential lease agreements (compared to, say, the global economy), and those are easier to amend and negotiate on than laws.

That's really splitting hairs.

It's pretty obvious that turning an apartment into a hotel room is a legal problem in many if not most instances. Making the claim that "people just aren't that concerned about the sanctity of HOAs and residential leases" is just plain delusional. You'll get concerned when your lease gets terminated or the HOA takes up action against you.

The whole situation is a moral hazard -- the owner/lessee of the apartment/house bears almost all of the risks. AirBnB just needs to keep the PR machine churning. That's why they have figured out how to verify the identity of renters (to address the issue of some sort of psycho serial killer renting rooms), but still find it impossible to confirm that lessees of property can in fact rent those rooms.

You seem to be of the belief that a) financial institutions never play the limited role of facilitator and b) entities which facilitate transactions are somehow less culpable when they know that the transactions they are facilitating are ethically questionable. You're wrong on both counts.

Many financial institutions facilitate transactions. Goldman Sachs paid over half a billion dollars to settle charges related to the Abacus deal it facilitated in 2007.[1] Goldman was paid a $15 million fee for facilitating that deal, a meaningless fraction of the $46 billion in revenues it earned in 2007.

As I noted, the vast majority of apartment leases forbid subletting without the landlord's approval, and you would be hard pressed to find a single landlord who allows tenants to turn their apartments into hotel suites. As such, one could argue that as far as apartments go, this isn't a "might" proposition. There's a very reasonable argument to be made that AirBnB can safely assume that apartment listings on its site more often than not involve a tenant breaking the terms of his or her lease.

If you don't have a problem with AirBnB facilitating apartment rentals in the face of constructive knowledge that many of them are taking place in violation of the terms of the host's lease, that's fine. But then you shouldn't have a problem with financial institutions when they merely facilitate transactions that don't pass your smell test. What's good for the goose is good for the gander, right?

[1] http://sevenpillarsinstitute.org/case-studies/goldman-sachs-...

Well the hilarious part is that AirBnB now requires guests to prove who they are by posting a passport.

It wouldn't be rocket science to require hosts to prove that they have ownership or approval to let out their flats (i mean, you can look up property ownership info online for most US cities). Especially since, from the host's perspective it's not a 1 time transaction.

They're just skirting the law because it's convenient.

From the perspective of a home owner, if I rented my flat out, I'd definitely include a no subletting clause. I'd also love to have a way to temporarily blacklist my property on AirBnB and other such sites.

There's both the letter and the spirit of the private contracts.

Some HOAs are restrictive on sublets and some newer ones explicitly prohibit short-term rentals or require an owner live-in minimums. The question is why?

The spirit of such regulations is that long-term owners, who typically rule the HOA, don't want their complex/neighborhood to be used for short-term parties, which brings noise concerns, safety concerns, possibilities of vandalism, etc.

If that is going to happen, HOA has the means to nab the offending owner, usually start him off with a warning, and later move that up to penalties or whatever other means they have at their disposal. If that never happens, HOA will stay mum.

Why should AirBnb get in front of the issue that's self-solving?

> "Surely that responsibility is the host's."

So are good quality photos in order to get bookings. Yet Airbnb will make an effort to send a proper photographer around.

https://www.airbnb.com/info/photography

How does US insurance work?

Some people are not going to be covered by insurance during a sub-let. Those people might be the host or guest or apartment owner; but in the case of catastrophe someone is going to lose out.

So there is some value to customers of having listings vetted by AirBnB so that everyone knows that the sub-let is legal and insured.

Hardly Airbnb related either, here's a response I got back from a craiglist ad for a temporary sub-lease (that I declined):

> My place is available for the whole month of June, and is located at xxxx. Subletting isn't technically allowed at the building, so you would need to be careful around the staff.

Contract terms, like laws, might be outdated or imbalanced, like when they're based on fears from an age with far less of our modern credit/reputation/identity-monitoring, or when circumstances have changed significantly since their negotiation (or in the case of residential leases, rote templatization).

Thus there's the idea of "efficient breach" - where the right thing to do might be to break the terms and compensate the counterparties, leaving everyone better off:

http://en.wikipedia.org/wiki/Efficient_breach

There are many tiny breaches of leases and other contracts that leave society better off: looking the other way if a small pet or temporary houseguest arrives, or there's an occasional bit of "medicine smoking" on the premises, or some unapproved property improvements. It's tough to work up moral outrage if there's no evidence of actual harm, just technical violations. Compare malum prohibitum vs. malum in se:

http://en.wikipedia.org/wiki/Malum_prohibitum

http://en.wikipedia.org/wiki/Malum_in_se

A contract is an agreement between two private individuals. If one of those individuals believes that the terms of the contract are antiquated and thus cannot honestly provide an assurance of honoring them, that person is ethically bound not to execute the contract. All the Latin in the world doesn't get you around that.

While some cities will probably revise occupancy and hospitality regulations to accommodate things like Airbnb, the tension between renters and landlords w/r/t/ sublettors is quite old and quite well explored by the courts (check out your local tenants union for chapter-and-verse citations). The lease provisions that forbid Airbnb will stand up in court.

>A contract is an agreement between two private individuals. If one of those individuals believes that the terms of the contract are antiquated and thus cannot honestly provide an assurance of honoring them, that person is ethically bound not to execute the contract. All the Latin in the world doesn't get you around that.

That is really a very simplistic view of the real world of real estate. For example, in 1983 when I bought a Houston house, I read every scrap of paper involved in the transaction. (Title company closers call us "readers.") The faded Nth generation copy of the deed restrictions ("an agreement between two private individuals") had horrific language about not allowing those of other than the white race to live in the property (unless in servants quarters). By that time, that language had been neutralized by the Supreme Court, but there was a good period of time where it had legal force but had to be ignored by those of good conscience. George W. Bush got the one news cycle treatment about that as the same language was in the deed restrictions he signed, as well as in many subdivisions from that era. That language carries on in the record forever.

Lease contracts are contracts but deeds aren't really contracts. Terms of a deed can run with the property in a way that terms of a contract cannot.

A deed isn't a contract, but a deed restriction sure is:

http://en.wikipedia.org/wiki/Deed_restriction

In American law, a covenant is best thought of as something different than a contract. They are related, but covenants are a property law concept, while contracts are their own area of law. A covenant can run with the land: someone in 1920 can put a restriction in a covenant that the owner of the property in 2014 must abide by, even if the property has changed hands many times in the interim. However, contracts only bind the parties that agree to it.

The distinction between the two is very relevant vis-a-vis your response to 'tptacek. The terms of a lease contract are freely bargained-for between buyer and seller in the present day. Because contracts cannot bind non-parties, they will only contain provisions that at least one party considers meaningful. However, a covenant is not freely bargained-for between buyer and seller in the present day. Both the buyer and seller may be bound by provisions that both believe to be antiquated (like covenants not to sell to particular minority groups).

If you think a contractual term is antiquated, you're free to bargain with the seller to have it eliminated. With a covenant provision, however, both you and the seller might be stuck with what someone wrote-in decades ago.

I'm not sure what your point is. Sublettor restrictions on leases have been challenged in court, and there are classes of restrictions that have been judged unconscionable; you cannot, for instance, rent out an apartment in Chicago and absolutely forbid sublettors, nor (obviously) can you forbid African American sublettors.

So my point isn't that the black letter language of any contract must in all cases stand up in court. My point is that the restrictions in leases that block Airbnb will stand up, because despite the relative novelty of Airbnb, the lease restrictions they butt up against aren't obscure. They are central to the tensions between renters and landlords and thus well-tested.

Also: if someone puts a contract in front of you that requires you to discriminate against African Americans: no, I don't think you can ethically sign it.

>Also: if someone puts a contract in front of you that requires you to discriminate against African Americans: no, I don't think you can ethically sign it.

Again, you make a simplistic statement that ignores the real world. When social systems are realigning, there is a period when you ignore the plain terms of the contract because you know people aren't enforcing it anymore. Whether that is happening with AirBnB or not is not my point. My point is that it is really easy to make a blanket statement about being ethical in contract law. The chance of that statement actually being the "ethical" choice in all cases is, effectively, zero. The real world is much too complicated to reduce it to the logical exactitude you are claiming.

When you sign a lease, your landlord expects approval over sublettors. You know they do. They know they do. The contract says they get it. This notion that the Internet is rewriting the ethics of that situation is relativistic bullshit; the argument is embarrassing.

Sorry, but the Internet has not in fact rewritten every rule that is somehow inconvenient to people on the Internet.

Wow, we must be having two different discussions. I don't disagree with your last comment. In fact, not a single word of my comments have anything to do with the internet, and, in addition, my original example predates the web by a good ten years. I only object to your making blanket statements about it being "unethical" to <insert absolute statement>. That is hardly a relativistic bullshit argument. In fact, entire fields of human study are devoted to the intricacies of the edge cases of such "embarrassing arguments." If only ethics could be reduced to predicate calculus.

Illegal contracts are illegal. What's your point? You can't sign away your legal rights.

If it's efficient breach than surely AirBnB sublettors violating their inefficient leases are compensating landlords for the breach making both parties better off. Right? Surely it's not one party secretly violating the terms of the contract and keeping all the benefits? That doesn't sound very efficient at all; don't think that's what Posner had in mind.

Quite common, in my experience:

Landlord has been using the same faded form contract for a decade; doesn't even know for sure which provisions are in it, or still legal under recent legislation or court decisions. (But, a standard 'severability' clause protects them when they've got illegal and unenforceable terms inside their template.)

Renter skims contract, but doesn't consider its terms negotiable, practically speaking. They often ignore the precise terms regarding notices, houseguests for more than X days, small pets, drugs on the premises, new roommates, sublettors, etc. In many cases the local law, or tenants' legal support groups, will defend them for violations of such terms - because the signed lease was illegal or unreasonable.

During the course of the lease, both the landlord and the renter may deviate from the exact terms from time to time, by tacit agreement, or occasionally verbal agreement (even if the contract stipulates "no verbal amendments").

Many renter violations are essentially in the realm of "don't ask, don't tell". The landlord doesn't really care and also doesn't want to know, because knowing would force conscious acknowledgement, perhaps encouraging further violations or incurring liability. Only if there's actual property damage or risk of harm/liability (or other adversarialism has begun from other factors) does the landlord become interested in monitoring and enforcing every clause.

Into this mix comes AirBnB. Many landlords won't notice the activity. Or they'll suspect it but don't want to pry. Or they'll know, but don't want to be known to "know".

Yet they may notice the rental rates the market will bear go up, benefiting them for looking-the-other-way. They may notice the renter's treatment of the property improving – as they now share an extra interest in its appeal. Compared to an empty room/apartment, the presence of good guests can make the property and neighborhood a safer and more pleasant place. So landlords can benefit implicitly even without an explicit renegotiation of terms.

In fact, they may prefer this sort of indirect benefit – because they retain the optionality of enforcing the terms, if things go poorly, without the risk of formally approving the activity.

Real economic and social relationships are way more complicated than, "the letter of the rules is X so everyone is duty-bound to do no more nor less than X".

Doesn't that make Youtube a perfect example? It existed before the DMCA. The safe harbor provision was written specifically to protect websites like it because the owners of such sites had an influence on how the laws were written.

I don't think so. Looks like the DMCA was passed in 1998 [1], well before YouTube was created in 2005 [2]

[1] http://en.wikipedia.org/wiki/Digital_Millennium_Copyright_Ac... [2] http://en.wikipedia.org/wiki/YouTube

I find Airbnb tremendously valuable as well (Airbnb is probably hooking me up in London early next week, after I finish spending this week in a Scottish house I also rented through an online service). And I'm sort of addicted to Uber as well.

That doesn't make either of those services any less fraught. They can be incredibly valuable to me and a net negative for the communities they operate in. Not everything that makes me happy is good for society.

> They can be incredibly valuable to me and a net negative for the communities they operate in.

That is at least as true of government as it is of companies that bend or break regulations.

Curious: why choose to pay instead of using a free service like couchsurfing.org?

Personally, I prefer paying (cash), because it changes the nature of the situation. As a free guest, you are - or can be - expected to participate in the hosts' events, such as meals, touring the city, etc. That may be great, and I might still want to do it, but I'd rather keep my options open in case I don't get along with them or I have different plans.

I wouldn't call CS a "free service". It's supposed to be more of a community. It's great for meeting people and learning their way of life, but if I travel on business or when I know I won't have much time to spend with the host, I find alternative accommodation.

There's four of us traveling together. We're not looking for spare rooms. :)

"As property listing sites go, Airbnb did not produce any true innovation."

Strongly disagree. As an Airbnb host (I rent out my master suite on Airbnb), there simply wasn't a site where I could do that before. Craigslist? Forget it--spam heaven, and no calendar or payment system. And VRBO has always been designed for "vacation homes", not "rent a single bedroom in a house you occupy" (which is why I use Airbnb.)

I live in Austin, and Austin has responded to Airbnb by making hosts pay hotel tax, and requiring us to register with the city. While an inconvenience, I'd rather do that than not be able to make extra income renting out the room. I hope San Francisco can do something similar (and I really hope Airbnb builds this into their site so I can stop filing paperwork and mailing paper checks every quarter!)

Maybe the reason an alternative didn't exist because others realized it was against a lot of laws, regulations and tax codes?

For example, I could start a service that allows people to make food in their house and sell it online. The reality is that in most municipalities you cannot simply cook food in your kitchen and sell it.

The difficult part in Airbnb, Uber and my imaginary sharing economy food service is managing to get big enough before authorities catch on. And getting big fast just happens to be something the VC model is very good at.

In my opinion it's more an innovation of hyper growth VC funding as a means to out run authorities enforcing regulations, laws and tax codes as opposed to the innovation of something built into the individual service of Airbnb, Uber etc.

> The reality is that in most municipalities you cannot simply cook food in your kitchen and sell it.

Lots of stuff sold at food co-ops and farmers' markets skirt these rules and no one bats an eye. Yet they're doing pretty much the same thing as Airbnb and Uber -- performing valuable services while entering questionable regulatory territory.

It's weird how baking pies in your own kitchen and selling them is considered a very wholesome activity, yet using your own car to drive people around is somehow objectionable.

>no one bats an eye

Some people bat an eye.

http://www.forbes.com/sites/erikkain/2011/08/03/the-inexplic...

Its because the result of buying from a terrible baker is I might get food poisoning. On the other hand, a terrible taxi driver could very easily get me killed.

The regulations in place don't do a huge amount to fix either of those problems, but having something in place makes people feel better.

so... the worst case in both scenarios is that you die. The odds of a negative outcome are similarly negligible both ways.

I'm not sure you thought this through.

So, guess what Airbnb is doing next?

http://venturebeat.com/2014/06/10/airbnbs-stealth-home-dinin...

haha, yeah, I was just about to point this out.

It's quite a bit easier to die from "disruptive food" than "disruptive lodging" in my personal experience from roughing it once upon a time.

"The traditional taxi service is terrible for drivers"

The traditional taxi service, if bad for drivers, is simply because there are enough drivers that will work and be treated like that to make it terrible for the group as a whole.

This happens in any employment situation where supply exceeds demand.

Because there is a low barrier to entry to be a driver as well as lack of other opportunities for drivers the people in charge get leverage.

Likewise "superstar" developers are treated like royalty and well paid in this industry. If all the sudden there were 4 times the superstar developers vying for jobs (assuming demand stays fixed and a superstar is a superstar) all that would go out the window and wages and benefits would almost certainly drop.

I'm a pretty good photographer but decided many years ago that since photography had a low barrier to entry, and only a few made it to the top, wages were decreased by competition to make it a non attractive career.

Supply and demand is not the only actor at play in employment. Otherwise, you wouldnt need minimum wage, or laws of any kind to protect employees (or businesses) from the other side.

And also, in the particular taxi-driving business, the problem is not supply/demand of drivers, its of city permits to be a taxi driver. Drivers working for Uber/Lyft do not take the same abuse as taxi drivers.

The taxi business is a racket, made by people that took that business, got an advantage in that time, and could make laws to their own benefit. Uber found a loophole in those laws, and got to be a winning player in that market. And now, they are going to be one of the actors in redefining the new set of laws regarding this,

The effects of the minimum wage and the effects of city permits are precisely supply and demand effects (specifically, a minimum wage is a price floor in the labor market, and city permits constrain supply).

The problem for drivers isn't a lack of demand for their services. The problem for drivers is that the buyers for their services are not the people who need a lift, but are the people that own the licensed cabs. The buyers face a monopsony for their services, which always ends up in poor treatment.

The problem is not a mismatch between supply and demand. It is an artificial barrier between the supply and demand meeting up.

Except, now Uber/Lyft has vastly increased supply and is better for drivers.

The difference is that in a lot of cases, there are kind of a "hard cap" for demand that can't be increased easily without a lot of factor (accountant, lawyer comes to mind). However, I believe there are certain professions where if you're only concerned with the superstar level, the sky is the limit (demand-wise): there are no artificial (market) cap on the value you can added to the society.

That is until human is immortal, energy is unlimited (to a first approximation), and/ or the Singularity happened.

It's bad for them because the market has, over time, negated the advantages of all the monopoly privileges they used to have.

"is how the true innovation they did was bypassing laws"

Hollywood started in the West Coast so they could be far enough from Edison and his patents

A lot less MP3 players would be sold if only legal songs were allowed to be loaded

But more importantly, a business goes deeper than a nice website. AirBnB built a business using a website, as opposed to several cases where a website is built and the business comes after (not saying it's wrong)

> Hollywood started in the West Coast so they could be far enough from Edison and his patents

If you're curious, as I was, this is a good read: http://www.history.com/news/the-renegade-roots-of-hollywood-...

I don't think Airbnb merely found a loophole in the law, they found a way to connect small operators to large markets. The small B&B market has been around for a long time, but individual hosts, especially if they are providing only 1 or 2 rooms, previously rarely had the ability to market their services in the way they can with Airbnb.

Along the lines of why corporations don't innovate consider that while traditional corporations also use money to fix legal situations or messes they have gotten themselves into, they generally wouldn't enter a market where upfront you know there will be legal problems down the road. It becomes more or less in many situations a non starter.

That's true of most industries - larger corporations are risk averse and let the market acid-test the startups, which are high risk, and then the corporations acquire the startups that pose a threat.

It's crazy stupid that Marriot or Hyatt have not tried to acquire Air BnB.

As property listing sites go, Airbnb did not produce any true innovation.

It innovated so much that it enriched my own life quite substantially. I needed what I was only able to find via Airbnb. And those renting their own places needed the money.

And screw the neighbours who never signed up to living in a hotel?

All the benefits you and the landlord enjoyed were externalised onto others.

It's true. The model for startups these days is to get millions of dollars of funding and spend it all on lawyers who can negotiate your ability to work around laws and regulations. While many of those laws and regulations have no place existing, it still feels sad to me.

>While many of those laws and regulations have no place existing

I suppose you wouldn't mind living next to this place then - http://www.latimes.com/local/lanow/la-me-ln-airbnb-party-hou...

I like my neighbors (except one... that's a different story...) They are friendly. We help each other clean off our cars in the winter. We check on each other's mail, pets, plants, and houses while we are on vacation. We help each other carry heavy items into the house. We are known to each other. I personally wouldn't feel safe with neighbors who revolve every day who have no ties to the community that we built.

Not to mention I wouldn't want to pay double rent because of all the houses that are taken off the market.

You would not have this opinion if you have ever had to deal with someone illegally subletting their apartment.

Or lived basically anywhere which has uni students.

Why? I'm not suggesting all regulation should disappear, just that it's inarguable that some regulation out there is wrong.

I think the point is that individual locations should be free to set their own regulations - at the building level at least. But city or state-wide ordnances against subletting or ride-sharing are too broad and allow certain actors to amass too much monopoly power.

>But city or state-wide ordnances against subletting

Many places (like NY for example) actually have laws that expressly protect tenants rights to sublet.

Landlord tenant laws mostly are there to protect the tenant from unfair slumlords.

That's just prejudice. Our renters (we own, not sublet) are and have been mostly college students and I wouldn't mind living with most of them. In fact, our biggest problem was with a working mother, who left our place half destroyed.

>Or lived basically anywhere which has uni students.

I've never had a problem with uni students in the city I used to live in and a couple lived in my building.

I'm all for proper regulation.

But on the other hand, recent technological advancements hold potential for huge improvements in almost every important industry(for ex. healthcare), but in many cases, are blocked by regulation.

Looking at the amount of value such innovations will create , it sometimes seem greatly unethical not to use that loophole.

I'm not sure about the comparison with Uber, but I definitely agree with you on how Airbnb's main innovation is finding a loophole around certain laws that are for the benefit of everyone. In Uber's case, however, I believe they were circumventing corrupt laws, put in place to help the medallion holders over anyone else. The taxi dispatch system is antiquated, and if it wasn't Uber or Lyft coming around to change it, it would most certainly have been someone else.

I don't believe Uber's only innovation is circumventing laws, because Uber can't be run using a simple spreadsheet. Airbnb can, I know that because it used to be.

> What I dislike the most about Airbnb's whole controversial business model, is how the true innovation they did was bypassing laws.

Why do you dislike that? Is it because you think any business which bypasses laws is inherently bad, or is it because you think these particular laws (zoning, hotel regulations, etc.) are themselves valid and should not be broken?

> the only innovative thing they did was finding a law loophole

Don't forget this:

http://www.quora.com/Airbnb-Craigslist-Spamming-Controversy

Wasn't aware of this but not surprised. My original comment was going to be to the part of "taking them out of craigslist" since people trying to use craigslist have to sift through their ads clogging up stuff.

Eh, laws are written by men. They are not some kind of ethical commandment from god or similar. Lots of laws are even downright unethical and get overturned from time to time.

I don't have some strong feeling about what AirBnB has done. I am passingly interested because I previously wanted to be an urban planner, before life got in the way. I find it intriguing that the Internet is reshaping how urban space gets used. We clearly need to create new mental models here. Our old ones are basically dinosaurs that ignore this new reality.

AirBNB did have provide a substantial increase in usability compared to their competitors. When I made my first stay in an AirBNB, I was comparing their offerings to those on VRBO.com, which has been listing rentals of this sort since 1995. AirBNB had a vastly better listing engine compared to the Web 1.0-link system VRBO had at the time. Since then, VRBO has gotten a lot better.

It's amazing how many business opportunities there are in finding ways to circumvent restrictive regulations.

It's almost as if regulations stop people from doing what they want to do and usually only serve a narrow few.

Yet year after year, politicians campaign vigorously for re-election by talking about how many new regulations they have written. And anyone who stands up and suggests that maybe a bit of deregulation might be a good idea is branded as someone who is inevitably 'a danger to children/way of life/jobs/etc'

So we have a situation where people gladly partake of services which innovate around regulations (usually because it relieves the consumer of the cost of those regulations) yet feel the need to keep returning politicians who promise to create more regulations.

The only explanation I have is that most voters think the cost-burden of regulations will always fall on another voter, and that the benefits will flow to them.

I couldn't agree more with you. AirBNB, Uber are my top two names. There are others.

Now hold on. Their innovation was monetizing couch-surfing, the 'sharing economy' as applied to places to sleep. Perhaps you can point to someone earlier who broke the ground, but the perception of the world at large is that Airbnb did it.

There are plenty of people who wouldn't be violating any rules or laws by being Airbnb hosts. Clearly the service could exist without anyone bypassing laws. You might instead argue that the business model requires laws to be flouted in order to turn a profit, but I don't see how you'd prove it.

I'm of two minds about this. On one hand, laws are the product of many years of accumulated experience, and wantonly tearing them down means you will probably eventually hit the exact same issues that necessitated the law's formation in the first place.

On the other, laws grow by accretion, they exist within a historical context, and they are virtually impossible to get rid of once they have outgrown that historical context. Pretty much the only way to get a law off the books is to intentionally break it and then build enough popular support during the ensuing test case that you can either get a court to strike it down or a lawmaker to introduce a bill to repeal it. So people who break these laws are sometimes (not always) performing an essential service by forcing society to re-examine the rules it governs itself by and determining whether they still serve the public interest. And you don't know whether they're heroes (think Rosa Parks, the Boston Tea Party, or Sony Betamax) or demons (think Napster or the Unabomber) until public opinion comes down one way or the other.

It's also interesting how people's reaction to this seems to illustrate Lawrence Kohlberg's Stages of Moral Reasoning quite sharply:

Stage 1 (avoiding punishment): "AirBnB is fine because it's very unlikely that people will get caught or prosecuted" or "I won't use AirBnB because I'm afraid of getting sued or fined."

Stage 2 (self-interest): "AirBnB is a good thing because it lets me rent out a resource I already have and make extra cash."

Stage 3 (social approval): "AirBnB is fine because all my friends use it."

Stage 4 (law & order): "AirBnB is a plague upon this earth because their business model involves nothing more than systematically breaking laws and profiting from it."

Stage 5 (contracts): "People have a right to freely enter into contracts to mutually benefit themselves. AirBnB facilitates these contracts, and therefore is beneficial to society. It is the individual's responsibility to respect contracts they have already entered into with other parties."

Stage 6 (justice & universal moral principles): "If I were a host, I would appreciate being able to make extra cash by renting out my place. If I were a guest, I would appreciate the extra housing options. However, if I were a neighbor of a host, I would not appreciate the extra foot traffic and possibilities for damage or altercations. In many cases in today's economy, hosts are strapped for cash, and AirBnB may be their sole source of income. A host's right to make a living and not starve outweighs a neighbor's right to peace and quiet, and so the right choice is to legalize AirBnB but with regulations that can protect the rights of neighbors to the greatest extent possible."

Interesting application of a series of moral principles. I do think you've missed a couple of reasons some people object so strongly to airbnb though. This service has the capacity to transform residential places with families into transient or tourist destinations. Even if the airbnb guests revolving in the spare bedrooms in the house next to mine are quiet and pleasant they aren't going to be a family with kids that my kids will get to know over the next decade of life.

I really don't object to airbnb' s existence. But I do think people in some neighborhoods should be able to trade their right to run a hotel out of their house in exchange for a legally enforced expectation that their neighbors won't either. This is critical for certain types of neighborhoods and is encoded in zoning laws.

Agreed. This does not say as much about Airbnb as it does about how much value is destroyed by outdated, ill-designed regulation.

I think you're largely right - but both Uber and Airbnb are therefore testaments to the fact that the laws suck. The arrangements for drivers/riders and renters/rentees seem to be working out well for both sides of the transactions in the vast majority of cases. We should ask ourselves if those regulations should exist in the first place.

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