
Airbnb says this man does not exist. So I had coffee with him - antr
http://pando.com/2013/12/08/airbnb-says-this-man-does-not-exist-so-i-had-coffee-with-him/
======
grellas
I am intrigued by the antipathy that is often expressed toward Airbnb in the
very circles where technological changes is heartily approved. Much of this
antipathy is centered around the issue of persons who use the service to
circumvent local laws and regulations governing hotel and rental units, with
the complaint being that illicit profiteers should be suitably punished and
(impliedly) so should those whose services allegedly abet them. This piece
makes that complaint without stating it directly dramatizing the fact that
such a person is there, in the flesh, exploiting the system, while stating
that Airbnb wants to deny his existence.

Legally speaking, Airbnb is like YouTube and similar services in offering a
service that is perfectly legal to do in proper cases _and_ that can be done
today to the immeasurable benefit of many in ways that could not even have
been dreamed of in the pre-internet age. When the service is used legally and
properly, it transforms how millions of people do things in their lives and
does so for the better: in YouTube's case, as an outlet for video display and
in Airbnb's, as a way of helping all sorts of people make more efficient use
of their residential holdings. When the service is misused, however, others
can be hurt: in YouTube's case, with persons posting and potentially profiting
by infringing the copyrights of others; in Airbnb's, with persons attempting
to circumvent laws regulating uses of commercial rental space. In each case,
there is legitimate reason for many to complain of the misuses because they
hurt people and people react to being hurt, and the law has measures in place
to punish the direct malefactors in various ways. Yet what does this mean,
legally speaking, for the provider of a lawful and, indeed, exceedingly useful
service that is seen to profit in part from the activities of those who not
only use their service legally but also from those who do not.

When you get to such cases, you arrive at the intersection of law with public
policy. Unless one is to bar technological progress and the change that it
brings altogether, one must devise rules to address the illegal uses that are
bad while preserving incentives to promote the technological progress that is
good.

In the case of YouTube, this was done through DMCA, which (whatever its other
problems) did a pretty good job of setting up safe harbors that enable
services such as YouTube to continue to do what they do without incurring
liabilities for the wrongs of malefactors while at the same time requiring
them to build in safeguards to protect the rights of those who might be hurt
by their wrongs. This was not an easy task and even today the courts are
sorting through the frictions occurring at the edges. But, though not perfect,
the law has set up fundamental rules that, in the end, have managed to curb a
good number of the wrongs while enabling a worthwhile service to survive and
prosper.

In the case of Airbnb, the fights are occurring at the local level and are at
an early stage. As the players sort through the policy issues, though, the
same sort of primary issue needs to be addressed as happened with YouTube in
the video streaming area: how can the rights of victims of third-party
wrongdoers be protected without barring or significantly impairing the new-
found value for many in using a great new service wrought by technological
advances (and, of course, by the skills and talents of those who have built
the service)?

I don't know the New York rental market at all and have nothing to say about
how the issue is best resolved for the various persons affected by Airbnb's
service there. I sense intuitively, though, that things like "15% across-the-
board tax" are innately retrograde solutions that would serve to choke the
beneficial and legal side of the service. Occasional users really are _not_ in
the business of providing hotel lodgings and it is a pretty big leap to say
that they should be required to pay taxes as if they were. Or to require them
to be subjected to liabilities and risks in ways that hotels are. These
"solutions" are really just a way of governmental regulators, should they
adopt the, acting on behalf of some narrow lobbing interest or other to choke
a service that benefits countless others. They are overkill and would be the
same as if Congress, at the federal level, had passed laws saying that
YouTube-style services should be banned because they can facilitate copyright
infringement that hurts others. That sort of "solution" would have been folly
in our digital age and so too would any overkill-style governmental solution
affecting any beneficial and innovative technologically-driven service that
can come about by linking what people have to offer with what people need to
use, and that includes Airbnb. Many other such services can easily follow (the
"Airbnb for food" or the "Airbnb for whatever"). Do we really want to choke
off the great benefits that can come from all this just because third-party
abuses can arise.

The key to all this is to deal with the abuses while preserving the values
conferred by the new services. If there is antipathy toward the wrongdoers,
there is no basis for directing this to the innovators themselves. Why this
should be happening among those who otherwise favor technological change is
something that really baffles me. I for one commend Airbnb for what they are
doing and for the benefits it can bring to many. If they make fortunes out of
it all, so much the better. The potential third-party abuses do need to be
dealt with so that innocent people are not harmed. But they need to be dealt
with in narrow ways focused on the actual problems, not in blunderbuss fashion
that is short-sighted and, in the long run, harmful to us all.

~~~
gamblor956
Somehow, every other VRBO site (such as VRBO.com) manages to comply with local
laws. AirBnB doesn't--by choice. It refuses to comply with local laws because
this lets it avoid the costs of compliance. Ultimately, AirBnB's competitive
edge over its competitors is simply regulatory arbitrage.

This is why AirBnB generates such apathy. Take the regulatory arbitrage away
and AirBnB isn't a technical startup or a market disruptor; it's just another
VRBO site with pretty CSS.

 _They are overkill and would be the same as if Congress, at the federal
level, had passed laws saying that YouTube-style services should be banned
because they can facilitate copyright infringement that hurts others._

No, completely different, and as a lawyer you know this. Local issues are
valid concerns for local laws. If New York wants to pass an across the board
tax on temporary rentals, it is absolutely not the same as if Congress passed
a country-wide ban on Youtube-style service.

 _The key to all this is to deal with the abuses while preserving the values
conferred by the new services. If there is antipathy toward the wrongdoers,
there is no basis for directing this to the innovators themselves._

Existing laws already do this. And as a business that injects itself into the
market governed by such laws, AirBnB has taken on the burden of complying with
such laws. Moreover, AirBnB isn't an innovator--it's a copycat. The only
innovation AirBnB provided was sub-unit rentals (i.e., just a room or a
couch), which is no longer the mainstay of its business.

~~~
brudgers
The illegal hotel use in my neighborhood was primarily offered on VRBO.

~~~
gamblor956
Let them know. My building had an issue with a unit being offered through
VRBO.com and AirBnB despite COA rules against it. VRBO.com took the posting
down after I sent them a complaint with a copy of our COA rules, and they
flagged it in their system so it couldn't be reposted. AirBnB did nothing, and
the listing is still there. (However, the COA has since seized the unit and
changed the locks since the unit owner failed to pay his COA dues or provide
proof of property insurance, so any person trying to rent the unit through
AirBnB will be SOL.)

~~~
brudgers
That was not a legal option in our case, the covenants upon the Deed of Title
were not enforceable by the impacted neighbors because an interest in the
legal person that sold the lots did not convey with the lot - i. e. there was
no HOA or COA. Instead, covenant enforcement would have required locating the
heirs or successors of the' legal person' who platted the neighborhood and
their goodwill toward enforcing covenants some thirty five years later,
assuming such use was against the covenants upon the Deed of Title.

Our case was not a private dispute, or rather it was intractable as one, and
in any event the use was illegal. Thus it took overcoming the normal
bureaucratic wall of mud at the enforcement arm of the city zoning department
and eventually offering testimony before Judge Jim* in Municipal Court on a
Tuesday afternoon last spring.

*Judge Jim had been the Miss June's diforce attorney several years before his election And a fellow Rotarian of another testifying neighbor.

~~~
jessaustin
In all of those details, I don't see any indication that VRBO continued a
listing that it knew to be illegal. Sometimes the legal process just takes a
long time. Short-circuiting the process doesn't serve the interests of
justice.

------
bradleyjg
> The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand
> disciple, and, in the parlance of Silicon Valley, views himself a disrupter.

Making money by breaking regulations and lease terms is hardly the stuff of
the heroic inventor. What other criminals count as "disrputers"? Insider
traders? Identity thieves? Insurance fraudsters?

This guy is sociopath and I hope he ends up in prison.

~~~
aliston
You also have to also ask why it is that these arbitrage opportunities exist
in the first place. It seems to me that the fact that these folks exist is
essentially the market arguing that there are inefficiencies in government
regulation of the hotel industry. Perhaps the government shouldn't be
implementing arbitrary taxes to direct to the politically connected.

~~~
pyduan
The fact there are arbitrage opportunities are _precisely_ the reason the
regulations exist.

The problem is that the market equilibrium would be really bad for residents.
You have to stop and think about what there being no such opportunity would
mean: housing in these areas is in scarce supply, and letting the market do
its thing would incentivize people to convert rooms to full-time hotels at the
expense of people who actually live there (since the true market value of a
room is much higher than the average rent; in other words, your arbitrage
opportunity), which will in turn reduce the supply of apartments available for
residents, thus making rent even more expensive than it is right now for the
few that will be able to afford it.

I agree the regulations are not perfect, but people have to understand it
comes from a conscious political decision to protect residents. And this by
the way is why you need a government to create such rules, because contrary to
what people like the man in this article might think, the market equilibrium
is not always the most desirable situation.

~~~
cbr

        which will in turn reduce the supply of apartments
        available for residents
    

If the cities allow new construction the supply should expand to match the
increased demand, creating jobs in the process.

~~~
potatolicious
Manhattan is extremely construction-friendly. There are, however, limits. It's
already an extremely developed city, so there's no real empty space left. Any
construction will involve buying out existing owners/tenants, demolition, and
replacement.

This is happening, but naturally is not fast. There are reasons why you
wouldn't someone to demolish a skyscraper in the middle of Manhattan without
oversight.

Adding to this problem is the state of infrastructure. Manhattan streets are
_packed_ , and most subway lines also. There is currently a proposal to up-
zone the area directly around Grand Central and raise the height limits. This
is a great thing, except all subway lines feeding Grand Central are already
operating past peak capacity. Creating this extra space is pointless (and in
fact detrimental) unless there is infrastructure ready to support it.

There are already infrastructure projects in place to alleviate this, but
digging tunnels through bedrock is understandably not a fast affair. The East
Side Access project will connect Penn Station and Grand Central, and alleviate
some of the traffic at both. Adding to the complexity here is that Manhattan's
underground is already _filled_ with tunnels of all varieties, forcing new
projects to tunnel ever deeper, with requisite cost and slowness.

The world is complicated, city planning is complicated. This isn't software
where we can just deploy a new server - apartments, offices, subway lines,
streets, sewers, power plants, cannot be willed into existence at a whim.

~~~
aeorgnoieang
Do you live here? Because there are lots of empty lots and there are tons of
under-developed areas. I don't know why you believe "Manhattan is extremely
construction-friendly"; it's certainly not 'construction-friendly' enough so
that there are numerous affordable housing options. Some crazy number of
housing units are under either rent control or rent stabilization. The housing
dynamic here is _insane_.

~~~
potatolicious
I do live here. I know of exactly one substantial empty lot in Manhattan -
just south of the UN building. I still wonder what the plan is there.

Hell, the biggest development project going on right now involves building _on
top_ of a train yard. This does not suggest an availability of actual empty
land.

> _" and there are tons of under-developed areas"_

And yes, that's precisely what I referring to when I mentioned that any new
development would have to involve demolition and replacement. Replacing a
15-story apartment complex with a 45-story apartment complex may be a good
idea, but first you'd have to buy out all the owners in the building.

That sort of thing is neither simple nor fast.

The infrastructure problem exists still also. Spanish Harlem can be argued to
be underdeveloped - and we can surely replace those buildings with tall
apartment complexes... except the 4/5/6 subway is already _massively_
oversubscribed. You can build apartments there, but said residents won't be
able to get to work. The 2nd Ave Subway is supposed to alleviate a lot of this
pressure, but we all know how fast _that_ is going.

Same goes for basically all of Upper Manhattan - there are plenty of
opportunities to replace buildings, but not enough infrastructure to move
people around. Transportation (like most cities) is the biggest developmental
bottleneck.

> _" it's certainly not 'construction-friendly' enough so that there are
> numerous affordable housing options."_

You've missed the entire point of my post. "Construction friendliness" is not
Manhattan's bottleneck. Lack of infrastructure, and systemic slowness inherent
in building replacement (read: buying out existing stakeholders) are. For all
intents and purposes, Manhattan is "friendly enough".

There is a building that's _finally_ going up near me in the Lower East Side -
a replacement of an old walkup. The owners in the old building resisted sale
for a long time, as it would involve displacing them, plus they (rightly)
speculated that their property value would continue to increase. The solution
at the end of the day is to offer existing owners a _brand new_ (albeit small)
apartment in the new building. Not only did it cost the builders money to
demolish and erect the new building, but also to buy out the old owners _and_
give them part of the new property _for free_. Things like this are why
Manhattan is replacing buildings so slowly, not because Manhattan is somehow
opposed to development.

------
hapless
He knows that neighbors despise what he's doing, but he doesn't see any reason
for us to have hotel regulations. That might stop him from making money.

Color me surprised that he's a Rand disciple.

~~~
RockyMcNuts
Must be nice to go through life believing you're entitled to ignore
externalities that cause discomfort to others, or not pay for public goods
that you benefit from. Keeps things simple when you just have to worry about
getting what's yours.

~~~
hacker789
Everyone is entitled to (and does) ignore externalities that cause discomfort
to others.

If Alice performs well at her job, and her company gains a lot of marketshare
as a result, she has likely caused discomfort for the employees of her
company's competitors. It's frightening to imagine a world in which Alice is
forced to stop performing as well because of her competitors' discomfort.

A simpler example: "hapless" is all over this thread, causing discomfort for
those who don't want this man thrown in prison. Should "hapless" be forced to
stop?

Additionally, everyone is entitled to (and does) ignore public goods that they
don't pay for. It's frightening to imagine a world in which we force Alice to
pay for her neighbor's renovations, or to pay for a weekly advice newsletter
she never signed up for.

People like the man in the article make these value judgments more
independently from government policy than most people do. If anything, _that_
is your contention with him, not that he doesn't pay for things he didn't ask
for, and not that he sometimes ignores the discomfort caused by his actions.

~~~
beering
I think you misread the comment you're replying to.

People are _not_ entitled to ignore all externalities that cause discomfort to
others. For example, creating toxic pollution that spreads to people around
you and forcing them to pay the cost of cleanup is not OK, but you're
suggesting it is? If you were affected by this kind of pollution, would you
just shrug and say, "It's OK for them to ignore this externality?"

And the part about not paying for public goods that you use, you seem to have
misread as "not using public goods that you don't pay for".

People are upset with the AirBNB guy in the article because he's causing
problems for the neighbors, and profiting because he's ignoring regulations.
It's profiting off the backs of other people, so he's more like a leecher than
any Ayn Randian hero.

------
nlh
I don't think AirBNB actually claims this guy doesn't exist - that's a
clickbait gimmick. What they do claim is that he's in the minority, which I
believe is true.

I'm an AirBNB host in NYC and I know a lot of other people who are too. We're
all exactly the kind of people AirBNB wants -- we have places that
occasionally are available/empty, and AirBNB has become a great way for us to
make a few extra $$. I personally don't make a dime of profit off my place (I
do, however, offset a good portion of my rent).

I know the bad actors exist, and I know we do need some form of compromise
between "No AirBNB!" and "AirBNB free-for-all". Not sure what the perfect
solution is just yet, but I m confident a good one can be found.

~~~
hapless
The good compromise already exists:

* Sub-leasing is legal in NYC, for medium-term rentals. You are free to sub-lease your place during your month in europe, you are not free to sub-lease it nightly to transients.

* Owner-occupied Bed-and-Breakfasts are legal, but carefully regulated.

If AirBnB restricted itself to listings in these two (completely legal)
categories, no one would object to them.

------
Lucadg
I've been making tourist apartments available online since 2001, long before
Airbnb (a competitor for me) even existed, and I never heard anyone in any
city ever complain about tourist apartments, be it Prague, Venice or Paris.

What happens is that a certain, usually small, percentage of residential
apartments is made available to the tourists.

Each apartment means about one/two less hotel rooms.

Hotel rooms take space too, they are not floating over the city. They often
replace old residential buildings to build hotels effectively taking away
space from residents who are pushed out of the city.

So we may say that tourism takes space in the center, not apartments.

I didn't hear much complain about this neither, as tourism brings money and,
if anything, they want more of them. It seems to me that NY has a very
specific situation so Airbnb may be actually harming the residents, I don't
know, but in general Airbnb is not doing anything particularly new in Europe,
where apartments for short term rent have been existing for long time.

The hype is all about "rent from another human being" but the reality, and I
guess most of their business in Europe, is simply providing a better platform.

Maybe NY regulators could look at Prague or Croatia to solve the problem.

[edit: formatting]

~~~
modfodder
I believe, imho, that the issue has exploded because AirBNB is a Silicon
Valley backed company, and the worry is with explosive growth and scale. It's
not a big problem when a miniscule amount of the apartment stock is tied up as
short term rentals, but it can become a huge problem as that percentage grows.

The public and our representatives in government are more internet savvy too
so these issues (or at least the stories) bubble to the top more quickly.

As a resident in NY and I can appreciate the ability AirBNB gives me to rent
out my apartment easily (I haven't). But I also see that "The Man That Doesn't
Exist" is "stealing" apartment stock for hotel use, which drives up my cost of
living as a renter (on the flipside, his "theft" of the apartment would be
beneficial to me if I was an owner, driving up the value of my property).

~~~
Lucadg
In Prague, just to give you an example I know well, the number of apartments
for short term rent is pretty high and it grew pretty quickly too in the 90's.
The reason was not Silicon Valley growth but the end of socialism. Internet
was not involved but I don't really think the source of bookings or change
really matters. What matters is the effect on the rest of the economy and
society. As you say some people (owners in this case) profit in this situation
while others suffer and are pushed in less desirable areas (that would be 99%
of the time out of the center in Europe, and out of nice neighborhoods in US).
At the end for "people" aggregate (vs corporations) it may be a neutral
change.

What I am saying is that NY may seems pretty special but it may not be. The
fact that Hotels are so expensive may be a sign that Airbnb is bringing some
needed change in an overly protected business environment.

What if Airbnb forces some hotels to close and they free up residential space?
Is this a possible effect?

~~~
modfodder
It's possible, but highly unlikely imho. I haven't found AirBNB prices in NY
to be all that appealing (I live in NYC). They are at a discount, but not a
great enough discount for me to go AirBNB over the comfort and convenience of
a hotel and often find great hotel prices with apps like HotelTonight. And
when I've looked elsewhere, AirBNB places are similarly underwhelming. I can
see it being cheaper for a group to rent a nice apartment vs several hotel
rooms, but I often travel alone and find comfort in the convenience of a
hotel.

------
alanctgardner2
Why does AirBnb even allow more than one listing per user? How many people
have multiple residences which they can legitimately rent out legally? It
seems like it would stem a lot of criticism if they only allowed one residence
per user, along with real-name and address verification (which they already
use for renters).

~~~
marquis
There are a few places listed, for example in California, that are actually
registered as hotel/hostels and pay city taxes and advertise multiple rooms.
Though, I don't see they should be on AirBnB in the first place (my view is
that if you are a business you should not be on AirBnB).

~~~
_delirium
As an AirBnB user I would really like a way to at least filter such places out
of my searches. When I rent on AirBnB I want to rent from an individual who
lives in their home; I see it as basically couchsurfing but with money and
(often) nicer accommodations. If I wanted to rent a hostel bed or a room from
a vacation-rooms-for-rent agency, I'd be on another site. I basically treat
them as spam in the search results.

------
nico
I'm impressed by how much hate is directed in the comments to the guy in the
article. Seems like a lot of people here are either jealous about this guy
"hacking the system", or are just too self-righteous.

Why not instead use the article (as it was probably intended) as a way to
think and debate about things that are hard to agree on or that are hard to
define?

This caught my attention for example: "The Man Who Does Not Exist claims
regulations that govern rental apartments are akin to drug laws. They are
useless, unenforceable, and an affront to the general public.", and although I
don't have a strong opinion about hotel regulation in NY (or elsewhere), I do
agree that current drug laws pretty much only benefit government agencies
(they get funding) and drug cartels (by artificially raising prices).

~~~
hapless
I approve of the law as it stands. Hotel taxes and hotel regulation improve my
quality of life.

He breaks the law for money. As a result, I would like to see him punished.

(As a secondary matter, he is loathsome for defrauding his landlords --
renting out space to be used as a hotel is a much higher-risk proposition than
a long term residence)

~~~
nico
Except there is a debate now, because hotel law was not created to regulate
people renting out their places. So now people on both sides need to agree on
a solution, given it's not clear whether hotel laws apply directly to people
on Airbnb or not.

This is a similar (if not the same) issue that Uber/Lyft and similar companies
are facing with current regulation all over the world.

Slavery was legal in the US for a long time, and a lot of people were fine
with it. Does that mean it should have stayed that way?

~~~
hapless
Hotel law was absolutely created to regulate people renting out their places.
The early working-class hotels were owner-occupied tenements with short
leases. Hotel regulation was written with that picture in mind.

And I simply cannot believe you compared hotel regulation to the institution
of slavery. It is not just in-apt, it is totally inappropriate. You should
feel ashamed of yourself.

~~~
randyrand
Some states (I know Illinois) actually have laws _protecting_ renting out your
own place. Typically referred to as subleasing.

Also, get off your high horse.

~~~
hapless
Subleasing is legally protected in New York. Operating an illegal hotel is
not.

------
dllthomas
_" Business is a zero-sum game."_

I'd be surprised if he actually thinks this (though only mildly) - Some
business activities are zero-sum, but in general business exists precisely
because it's _not_ a zero sum game.

~~~
hapless
He's a criminal. Of course his business is zero sum. His profits and the
consumer surpluses of his customers are balanced against the losses to
society.

~~~
randyrand
His business is not zero-sum. It actually creates wealth. People that used to
not be able to afford a visit to New York now can.

~~~
kordless
At $500 a night, your comment appears to be false. Additionally, the people
that live there will have a harder time competing with people who can afford
to live there part time at accelerated rates - which means, on average, the
place next door is threatening to drive up rent everywhere around it.

~~~
randyrand
You can't say I'm false and justify it by citing a single price. What would a
hotel have cost?

I don't understand your second point at all. But remember, prices are "set" by
firms competing for the lowest price/best value, not by "what the market can
bear." There should be no reason rents will go up.

~~~
tych0
It says in the article: the average hotel in NYC is $281/night.

~~~
toomuchtodo
I can book a decent hotel on HotelTonight
[[http://www.hoteltonight.com](http://www.hoteltonight.com)] in New York right
now for $99-267/night. Who is paying $500/night?

~~~
tych0
The people renting from the guy in TFA, which also states that he charges
$500/night.

~~~
toomuchtodo
Ridiculous all around

~~~
randyrand
It sounds like the flat is extremely nice. $8,000 a month was it? $500 for a
night is not all that outrageous compared to an equivalent hotel room.

------
marquis
>Current laws, for example, include a tax that goes directly to the Javits
Convention Center — a place scant numbers of New Yorkers have ever visited.

And yet which brings thousands and thousands of visitors to New York (with
spending and lodging money) yearly. Move the Javits Center to Jersey and the
surrounding hotels, restaurants and immeneties suddenly have very little
reason to be there.

~~~
bbanyc
In theory that's how convention centers should work. In practice, the Javits
Center is isolated by the surrounding railyards and few desirable amenities
have sprung up in the area.

(This may finally change in a few years' time with the opening of the Hudson
Yards redevelopment and the western extension of the 7 subway - so of course
it's been proposed to tear down Javits and build a new convention center at
the even more isolated Aqueduct Racetrack site. Ugh.)

~~~
marquis
Ah, I didn't know it was proposed to relocate. What would be the benefit to
having a convention centre away from built-up areas where it's even harder to
get to (or get away from..)

------
7Figures2Commas
> After dropping out of college, the Man took a job in high-frequency trading
> when he was 20, where, he claims, he made a killing.

> Thus far, he's found two properties that fit the bill. He charges around
> $500 a night for the first one; this second one is set to launch in the
> coming weeks with a similar price tag. He’s received funding from outside
> investors...

Parts of this story seem odd. If the Man Who Does Not Exist made a "killing"
in finance, why exactly does he need or want investors for this venture? It
sounds like the investment required is relatively modest and would quickly be
recouped. And I can't imagine that increasing the number of people formally
involved in his illegal enterprise will be to his benefit when, for one reason
or another, the gig is up.

------
johnbpetersen
I'm going to start selling drugs to kids on the playground of their elementary
school so I can get some shady investors and be labeled as a disrupter.

~~~
nico
If you get away with that, you would actually be a disrupter, except not a
particularly nice one.

Currently the most successful people doing that are child psychiatrists and
big pharma, but they convince the parents to buy the drugs for the kids
instead. Government seems to be fine with this though, as well as most of
society.

~~~
johnbpetersen
well played

------
yetanotherphd
Interesting article but they really should have dropped the "man who doesn't
exist" stuff after the first paragraph.

~~~
trimbo
Good point. Typically journalists would do something like "We will refer to
him as Joe, not his real name."

------
anon4
What's so hefty about a 15% tax? Just pay the city the 15% and pocket the
rest. If you need to, raise the price a bit.

Assuming your rent is 500$/month, to give one room to some random person for a
night you should charge them 20$/night to offset your entire rent for that day
after deducing the city tax. The person in the article charges 500$/night. In
that case you can even charge 50$/night and make money on top of having enough
to pay rent.

In no case would you need to charge more than a hotel - you both pay 15% tax,
but you don't need to pay a whole hotel's worth of workers for that room's
upkeep.

~~~
exhilaration
There are other issues, in many jurisdictions being a legally zoned hotel
requires things like sprinklers that the average AirBNB lister might be
unwilling or unable (in the case of a renter) to invest in.

------
CamperBob2
_The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand
disciple, and, in the parlance of Silicon Valley, views himself a disrupter.
Business is a zero-sum game..._

It would be so nice if journalists who write about "Ayn Rand disciples" would
actually read something by her first, so they would know what they're talking
about.

~~~
jasonwocky
Why? Assuming he's being truthful, all he's reporting is what the Man claims.

------
yetanotherphd
There seems to be some confusion about the term "externality" in this thread
that I want to clarify.

Not every effect that a person has on someone else is an externality. In
general, externalities are direct physical impacts you have on others. In this
case, noise is a good example, though the general "vibe" of having strangers
moving in and out, and the risk of violence from these people, assuming it is
higher, is also an externality.

On the other hand, anything that operates via prices is never an externality.
If AirBnB increased demand for rental housing and therefore raises prices,
this wouldn't constitute an externality.

The ethics of free market economics basically states that the government
should regulate externalities, but if someone is only effecting you via market
prices, that's your own problem.

Another kind of externaility is network externalities. Even though pricing
residential housing out of the market isn't itself an externality, there may
be a network externality associated with residential housing which means that
the market wouldn't provide the optimal balance of residential housing and
hotels (even if there was no noise issue). Because of this, the government may
also want to intervene by restricting the total amount of hotels. However, I
doubt this is a big factor in real life since the demand for hotels is clearly
much smaller than the demand for residential housing (who spends more than a
tiny fraction of their life in a hotel?)

------
zachrose
"According to NYC Research and Analytics, the average price for a hotel room
in New York City is $281 a night. That’s for all five the boroughs. In
Manhattan, it’s hard to find a room for under $350. Add that hefty 15 percent
tax and lodging in Manhattan is an activity for the 1 percent."

Yes, hotels in Manhatten are expensive, but calling it an activity for the 1%
is a stretch. The rhetoric of 99%/1% was in response to 1% of US earners
taking 20% of total income, at an average of like $400,000.

------
x0054
Not sure why, but instinctually, I really do not like the man who does not
exist. Perhaps it's because I am an Ayn Rand hating libertarian. Or perhaps
it's because he is the kind of man who takes advantage of the market with
little to no regard to externalities, and when someone questions his actions,
he wraps himself in an American Flag and screams about his god given rights.

------
ErikAugust
"Entrepreneurship fits him."

No, sounds like easy-to-pull-off arbitrage models fit him.

~~~
bluepool
Which is the core of entrepreneurship: Deliver something at a price that is
more than what you paid for that thing.

------
RubberSoul
If you're going to break the law, why go to the trouble of forming a Delaware
LLC? Won't that draw more attention to the operation and result in double
taxation? Doesn't it also mean breaking Delaware law by forming a corporation
for illegal purposes? Title 8, Chapter 1 says "A corporation may be
incorporated or organized under this chapter to conduct or promote any lawful
business or purposes..."

Furthermore, he takes all these steps to avoid 15% hotel tax, but pays 30% on
the LLC profits and then pays income tax when he takes earnings from the LLC?

Am I missing something here?

~~~
gamblor956
No you're not. It's another arbitrage play. He's creating the LLCs to cap his
legal liability for each rental unit while at the same time trying to get the
benefit of pass-through taxation benefits (meaning, no corporate level income
tax but also meaning that all of his income is subject to gross taxation).

In practice, it probably wouldn't work. LLCs are subject to a lower veil-
piercing threshold in New York than corporations are (though the requirements
are otherwise generally the same), so the LLC will do little to protect him
legally, especially since he's violating Delaware's laws regarding the
formation of the LLC.

He's also most likely using this structure avoid attracting unwanted
attention, since one of NYC's avenues for tracking down AirBnB offenders has
been to compare corporate filings with rentals offered on the site.

------
xacaxulu
Cartels hate competition. I love AirBnB because they level the playing field.

------
asveikau
> Current laws, for example, include a tax that goes directly to the Javits
> Convention Center — a place scant numbers of New Yorkers have ever visited.

> “Why are they entitled to a cut?” he asks.

The hotels may pay the tax, but I believe the idea behind this sort of
arrangement is that they would take this into account when pricing rooms. So
effectively, out of towners pay the tax when they get a hotel room. Even if
you ignore the other benefits the city and its businesses get from out of
towners passing through, the question being asked here is: why does money paid
by out of towners go into something that benefits out of towners?

Of course I agree with others that this story is at least embellished, too
much of this guy's history seems like goofy fantasy. (Paying homeless people
to purchase iPad 2 for export, really?) So this question being asked probably
reflects the author more than it does the interview subject.

------
microcolonel
Why should these restrictions even exist in the first place? People claim it's
about recourse, but that's what review sites and extensive contracts are for.

The author(s) of this drivel obviously want to paint this man in 50+ shades of
dark grey and blood red, but really is there anything wrong, morally, with
what he's doing, what is the purpose of the law other than to retroactively
add value to the investments of people who could already afford to offer
housing like this, and increase the barrier to entry for those who couldn't?

------
e12e
So, he rents out an apartment for 500 a night, while an average hotel room is
281 -- or 244 ex 15% tax. His 500 with added tax is 575. Essentially this is
in the same price range? Am I missing something?

So, he makes an extra profit dodging taxes (as he did by dodging VAT by
smuggling ipads). Well, surely it isn't news that crime does pay, as long as
you can avoid getting caught?

------
webmaven
There is probably enough information (# of properties, rates, $78k, etc.) in
the article for AirBnB to de-anonymize The Man Who Does Not Exist if they
wish.

------
psn
I'm bored; lets go deeper.

Why think the man who does not exist exists? why not assume pando made him up,
and made the whole story up? The story isn't so implausible that people would
doubt it. If anything,the story is toogood - count the number of times the man
comes across as a bad guy. Randian of the worst kind? tick. Used to work in
wall street? tick. In HFT? tick. Why did he grant an interview if he was
trying to keep his business secret? I don't know if the story is made up, but
its ringing bells in my head...

------
rajacombinator
So is the hotel industry paying bloggers to write these hit pieces?

