Brian Chesky, The New AirBnb, and Founder Mode

[Ernie]

https://www.wsj.com/style/airbnb-servic ... _permalink

Interesting article.

[JohnH]

https://www.wsj.com/style/airbnb-servic ... _permalink

Interesting article.

Yikes. AirBNB has been a disaster for neighbourhoods, for hosts, for guests, and for renters who need to find an affordable place to live. They got their start by simply ignoring existing laws and taxes regulating hotels.

I do not like the sound of an "AirBNB for anything", particularly when it means they have a platform with such a stranglehold on the market that they extract 15% (or more) of every transaction while in turn providing almost no value. AirBNB is quite sneaky about finding ways to almost never reimburse a guest for a terrible experience or an unreasonable host, or reimburse a host for a guest who trashes a place. AirBNB also dodges responsibility for when AirBNBs get used for drug dealing, raucous parties etc that disrupt the peace and quiet of a neighborhood.

On the other hand, Y Combinator invested $20,000 in AirBNB and was able to get a 300,000 times return to $6 billion. So it was a pretty good deal for Paul Graham and his husband.

[Thomas_muntzer]

https://www.wsj.com/style/airbnb-servic ... _permalink

Interesting article.

Yikes. AirBNB has been a disaster for neighbourhoods, for hosts, for guests, and for renters who need to find an affordable place to live. They got their start by simply ignoring existing laws and taxes regulating hotels.

I do not like the sound of an "AirBNB for anything", particularly when it means they have a platform with such a stranglehold on the market that they extract 15% (or more) of every transaction while in turn providing almost no value. AirBNB is quite sneaky about finding ways to almost never reimburse a guest for a terrible experience or an unreasonable host, or reimburse a host for a guest who trashes a place. AirBNB also dodges responsibility for when AirBNBs get used for drug dealing, raucous parties etc that disrupt the peace and quiet of a neighborhood.

On the other hand, Y Combinator invested $20,000 in AirBNB and was able to get a 300,000 times return to $6 billion. So it was a pretty good deal for Paul Graham and his husband.

It's true that in many residential neighborhoods, residents are affected by the commercial use of properties. Greater oversight by local authorities is needed. The debate is the same as that over Uber and taxis.

I've personally used Airbnb a couple of times as a user, and I've found it to be a good service. However, they should be held accountable when crimes such as drug dealing or other illegal activities are committed.

[mike]

https://www.wsj.com/style/airbnb-servic ... _permalink

Interesting article.

Yikes. AirBNB has been a disaster for neighbourhoods, for hosts, for guests, and for renters who need to find an affordable place to live. They got their start by simply ignoring existing laws and taxes regulating hotels.

I do not like the sound of an "AirBNB for anything", particularly when it means they have a platform with such a stranglehold on the market that they extract 15% (or more) of every transaction while in turn providing almost no value. AirBNB is quite sneaky about finding ways to almost never reimburse a guest for a terrible experience or an unreasonable host, or reimburse a host for a guest who trashes a place. AirBNB also dodges responsibility for when AirBNBs get used for drug dealing, raucous parties etc that disrupt the peace and quiet of a neighborhood.

On the other hand, Y Combinator invested $20,000 in AirBNB and was able to get a 300,000 times return to $6 billion. So it was a pretty good deal for Paul Graham and his husband.

I have an apartment that I rent on Airbnb, and I use Airbnb occasionally. Airbnb collects local taxes and hotel fees and pays them to local authorities.

I have had only a few issues with guests, and the only one I escalated was one who brought a dog knowing our no-pet policy. The guest quickly agreed to an additional cleaning fee. If they had not, Airbnb has insurance that covers damages caused by guests.

A few times when our family has used an Airbnb, we did it because it was much less expensive than renting three or possibly even more hotel rooms because of hotel guest limits per room. It was always a good experience.

Our Airbnb competes with local hotel rooms. Depending on the night, a guest pays about $140 in total. For this, they get two bedrooms with a queen bed in each, comfortable space for four guests. They also get a large living room, full kitchen and dining room, bath and laundry, coffee, and breakfast foods. The downside for people is that it's slightly less convenient in terms of location and ease of check-in than a hotel, so people who just want a quick stay and don't care about amenities and privacy will just grab a hotel. It's all about what people want.

I don't see it as surprising that Airbnb trying to broaden its services. Businesses always do things like this. My sense is that the whole travel industry including STRs is soft right now, and they might be seeing a decline in growth and are trying to generate some new things. The fancy new services mentioned in the article (hiring a Michelin chef?) don't look to me to be some new breakthrough or something that masses of people are looking for.

Airbnb wouldn't be what it is if it devastated communities. In my community, many people are making a bit of extra money with STRs, and not necessarily on Airbnb. It brings in income, tax revenue, and tourism dollars. Of course it has negative impacts in some ways. So do many other startups and disruptors.

[R7ehr]

I’m a big fan of Airbnb and VRBO. Mostly because hotel rules on minors and limits to how many can stay in a room. These rules make it much more expensive to stay at hotels with a decent sized family, plus hotels are much less user friendly for a decent sized family to stay in for a couple nights. Can’t beat having a whole house with a living room, dining room, laundry and kitchen.

But I support towns with housing shortages that cap the number of Airbnbs allowed.

[JohnH]

I have an apartment that I rent on Airbnb, and I use Airbnb occasionally. Airbnb collects local taxes and hotel fees and pays them to local authorities.

Which they famously didn't when they got started, which was part of how they differentiated themselves from hotels. They just straight-up broke the law until they were finally forced to stop, which took years.

I have had only a few issues with guests, and the only one I escalated was one who brought a dog knowing our no-pet policy. The guest quickly agreed to an additional cleaning fee. If they had not, Airbnb has insurance that covers damages caused by guests.

My experience in AirBNBs is having a $150 or other unreasonably high "cleaning fee"... and then a folder when you get there with a long list of things you have to clean up before you leave. (And yes, I've used AirBNB many times, just like you have, when it was to my own benefit. This doesn't mean that it isn't overall a negative impact.)

Airbnb wouldn't be what it is if it devastated communities.

Sure it would. There is nothing to stop it. If someone opens an AirBNB in your formerly-quiet residential neighborhood, there's nothing you can do about it, and now you get the joys of basically living next to a budget motel, except the motelier washes their hands of any responsibility to deal with the impact on others, because "that's the host's problem".

In my community, many people are making a bit of extra money with STRs, and not necessarily on Airbnb. It brings in income, tax revenue, and tourism dollars. Of course it has negative impacts in some ways. So do many other startups and disruptors.

We already had concepts like "vacation homes", "hotels", and "motels". AirBNB simply exists because it entrenched itself as a way to violate the law and skirt paying taxes until it got big enough they can stay in business now.

AirBNB, however, has very little room left for growth, which is why they are now trying to launch absurdities like "renting" a chef or a hairdresser to come to your house. They simply offer an inferior product to other platforms, specifically VRBO (who bought out all the rest of the competition) and hotels. AirBNB's net income decreased $154 million the last quarter because there is simply no way for them to grow. The platform has a bad reputation now and is riskier than using a hotel. (Of course, mike, people like you and I can often make things work to their advantage. I am speaking in the aggregate here).

Y Combinator, of course, won't care; they already got their $6 billion from their initial $20,000 investment and are off to the next big thing. A bigger question is: what on earth does AirBNB actually do to merit raising the cost of hotel/motel/vacation home stays 15%?

[Ken]

We use AirB&B from time to time and I have absolutely no problem with people who want to rent out their homes or vacation cabins to others. That is just commerce and has been going on long before the internet existed. It used to just be word of mouth or you would get printed directories of vacation properties from real estate companies in vacation towns and call on the phone to arrange rentals. Back before the internet my parents would just call a vacation rental company on the Oregon coast on the phone and they would tell them over the phone what properties they had available and we would rent that way. And then just go back to the same place year after year.

What I object to is big tech companies that ignore local laws and regulations and run roughshod over local communities for a profit. And then deny any responsibility for the local messes and distortions they have created because "they are just an app" operating in a different state or country and it isn't their problem.

We are going to a family reunion in Pennsylvania this summer and will be staying at a local AirB&B in the Belleville area. Seems perfectly fine for me that people there have the opportunity to rent their weekend cabins that way. On the other hand, thousands of people are being priced out of their homes and apartments in tourist towns like Barcelona because so many foreign investors have swooped into major tourist centers like that and bought up thousands of apartments to convert into more profitable short-term rentals for the mass tourist trade. I don't think that is good.

[mike]

I have an apartment that I rent on Airbnb, and I use Airbnb occasionally. Airbnb collects local taxes and hotel fees and pays them to local authorities.

Which they famously didn't when they got started, which was part of how they differentiated themselves from hotels. They just straight-up broke the law until they were finally forced to stop, which took years.

I have had only a few issues with guests, and the only one I escalated was one who brought a dog knowing our no-pet policy. The guest quickly agreed to an additional cleaning fee. If they had not, Airbnb has insurance that covers damages caused by guests.

My experience in AirBNBs is having a $150 or other unreasonably high "cleaning fee"... and then a folder when you get there with a long list of things you have to clean up before you leave. (And yes, I've used AirBNB many times, just like you have, when it was to my own benefit. This doesn't mean that it isn't overall a negative impact.)

If you felt the cleaning fee was unreasonably high, why did you book it? The total cost is given upfront when booking. That should not be a surprise. To decide whether the stay is a good value, you have to look at the total cost compared to other options. The reasons Airbnb hosts have separate cleaning fees is to encourage multiple-night bookings, or in other words to make multi-night stays a better value. Why charge the same daily rate inclusive of the cleaning fee if the guest is staying three nights.

About house rules, yes, a host can totally make themselves obnoxious by an excessive list of chores. But a host will learn very quickly by the guest reviews and by lack of repeat business what works and what doesn't work.

The real question is why Airbnb (and VRBO, and others) have become and remain so popular with real people who apparently really like their services. We wouldn't be having this discussion if things like the tax and legal ramifications hadn't been worked out satisfactorily to a great extent and the idea hadn't become sustainable for users, Airbnb, hosts, and municipalities.

[JohnH]

If you felt the cleaning fee was unreasonably high, why did you book it? The total cost is given upfront when booking.

The listing did not say that I would be expected to clean the unit myself and still pay a $150 or so cleaning fee.

That should not be a surprise. To decide whether the stay is a good value, you have to look at the total cost compared to other options. The reasons Airbnb hosts have separate cleaning fees is to encourage multiple-night bookings, or in other words to make multi-night stays a better value. Why charge the same daily rate inclusive of the cleaning fee if the guest is staying three nights.

AirBNB refused to show the total cost of a stay with a cleaning fee until last month when forced to do so by the government; in other words, AirBNB built its business after the last 17 years by essentially lying about the cost of a stay.

About house rules, yes, a host can totally make themselves obnoxious by an excessive list of chores. But a host will learn very quickly by the guest reviews and by lack of repeat business what works and what doesn't work.

No, they won't; if I leave a negative review, I will either be in a situation where they leave a negative review on me in retaliation, or AirBNB steps in and works out some kind of compromise in exchange for pulling the negative review. This is a major problem with platforms like AirBNB or Uber; you cannot rely on any kind of truth to be told view reviews.

The real question is why Airbnb (and VRBO, and others) have become and remain so popular with real people who apparently really like their services. We wouldn't be having this discussion if things like the tax and legal ramifications hadn't been worked out satisfactorily to a great extent and the idea hadn't become sustainable for users, Airbnb, hosts, and municipalities.

Apparently unsatisfactory enough that NYC banned them (other than in regular hotels, where AirBNB can sell hotel rooms like any other hotel can; most people prefer not to pay a 15% premium just to book a hotel room).

[mike]

If you felt the cleaning fee was unreasonably high, why did you book it? The total cost is given upfront when booking.

The listing did not say that I would be expected to clean the unit myself and still pay a $150 or so cleaning fee.

That should not be a surprise. To decide whether the stay is a good value, you have to look at the total cost compared to other options. The reasons Airbnb hosts have separate cleaning fees is to encourage multiple-night bookings, or in other words to make multi-night stays a better value. Why charge the same daily rate inclusive of the cleaning fee if the guest is staying three nights.

AirBNB refused to show the total cost of a stay with a cleaning fee until last month when forced to do so by the government; in other words, AirBNB built its business after the last 17 years by essentially lying about the cost of a stay.

Are you referring to the price that is displayed in search results, or are you saying that the full, final amount that is charged to your credit card is never shown prior to when you actually book? If the latter, yes, that would be lying about the cost of a stay. I believe it would also be illegal. If you are referring to the full, final price including all taxes and fees not being shown until the final step of booking, no, that is not lying about the cost of the stay, any more than many hotels and travel agencies which have the same sorts of practices.

About house rules, yes, a host can totally make themselves obnoxious by an excessive list of chores. But a host will learn very quickly by the guest reviews and by lack of repeat business what works and what doesn't work.

No, they won't; if I leave a negative review, I will either be in a situation where they leave a negative review on me in retaliation, or AirBNB steps in and works out some kind of compromise in exchange for pulling the negative review. This is a major problem with platforms like AirBNB or Uber; you cannot rely on any kind of truth to be told view reviews.

Neither the host nor the guest can read the other's review prior to writing their own, so I don't understand what you are saying here. The only possibility of retaliation would be in future bookings, which typically don't happen when there is a negative experience. Now, I believe you can respond to the other's review, but that's only after you have already posted your review and rating, and you can't easily get those changed or removed.

The real question is why Airbnb (and VRBO, and others) have become and remain so popular with real people who apparently really like their services. We wouldn't be having this discussion if things like the tax and legal ramifications hadn't been worked out satisfactorily to a great extent and the idea hadn't become sustainable for users, Airbnb, hosts, and municipalities.

Apparently unsatisfactory enough that NYC banned them (other than in regular hotels, where AirBNB can sell hotel rooms like any other hotel can; most people prefer not to pay a 15% premium just to book a hotel room).

But not unsatisfactory enough that Airbnb has not risen in popularity to the point where it really can't grow any more, according to your previous post.