Airbnb: A House of Cards?

MUSIC: “Perspiration” by Blue Dot Sessions

[SOT Brain Chesky – the verge podcast] I want to acknowledge something. If I could have done Airbnb all over again, I would have designed Airbnb with more stakeholders in mind, including communities. I was 26. I didn’t really understand some of the things I understand today.

SFX: We hear the sound of protesters 

[SOT Airbnb Ad] :I’m not sure we’d still be in New York, if we weren’t able to host on Airbnb. 

[SOT Protests] These tactics are turning our homes into illegal hotels. 

[SOT Airbnb Ad] It’s an opportunity to kind of bring cultures and just wonderful people from all over the world into our home. 

TY MONTAGUE (VO)

Welcome to Calling Bullshit, the podcast about purpose-washing…the gap between what companies say they stand for and what they actually do — and what they would need to change to practice what they preach. 

I’m your host, Ty Montague and I’ve spent over a decade helping companies define what they stand for —  their purpose — and then helped them to use that purpose to drive transformation throughout their business.

Unfortunately, at a lot of organizations today, there’s still a pretty wide gap between word and deed. That gap has a name: we call it Bullshit. 

But — and this is important — we believe that Bullshit is a treatable disease. So when the bullshit detector lights up, we’re going to explore things that a company could do to fix it. 

MUSIC: “Heliotrope” By Blue Dot Sessions

 TY MONTAGUE (VO)  

In this episode, we’re going to check out Airbnb – the short-term rental platform who have welcomed more than 1 billion guests around the world. 

Airbnb says its purpose is to create a world in which anyone can belong anywhere. That’s a pretty lofty purpose, but I’m a believer- so much so that I’ll often stay in an Airbnb when I travel. Instead of staying at some generic hotel chain, I feel like I’m supporting a local host and having a local experience.

SFX: We hear the sound of protesters

[SOT AirBnB Protest]  When we talk about ways to stem the eviction crisis, one of them is to ensure that people still have access to homes. If the vacant units are being illegally, turned into hotels for tourists within the it’s, one of the main reasons why we can’t get out of this eviction crisis.

TY MONTAGUE (VO)  

When I started the journey of this episode, I didn’t think there’d be a very wide gap between word and deed. No company is perfect, but as an Airbnb host myself, I believed Airbnb was good for local economies and by extension, local communities. But the more I dug into it, the more complicated this story got.

MUSIC: “The Griffiths” By Blue Dot Sessions

TY MONTAGUE (VO)  

Airbnb started literally by accident in the fall of 2007. Best friends and recent RISD grads, Brian Chesky, and Joe Gibeah shared an apartment in San Francisco.  One day they noticed that all the hotel rooms in the city were booked because of a big design convention. Being designers themselves, they decided to host people who were looking for a place to stay on an air mattress in their apartment.

Inspired by their hyper-local hosting experience, they created airbedandbreakfast.com for people who had rooms and wanted to host traveling guests.

Soon, Nathan Blecharczyk joined the team and after successful market tests at South by Southwest and the Democratic Convention airbedandbreakfast.com got invited to Y Combinator, a competitive startup incubator.

Now, with venture funding, expert advice and lots of optimism, Brian, Joe, and Nathan officially launched their hub for hosts to list their spare bedrooms. Those were the salad days.

And then a dude named David changed the course of the company forever. 

[SOT AirBnB Brian Chesky at conference] So David is Barry Manilow’s drummer. Barry Manilow’s drummer forever changed our business. When he decided that he was going to rent his entire apartment on his website while he was on tour with Barry. And before that we have this rule, you have to be in the place with them. You couldn’t provide breakfast otherwise! [laughter]

It seems so silly now, I know. 

TY MONTAGUE (VO)  

That’s CEO Brain Chesky, describing why in 2010 they went from being airbedandbreakfast to Airbnb, signaling a shift from spare room rentals to entire houses and ‘cue scary music’ sowing the seeds of a big future problem.

Meanwhile, the company quickly grew into a household name. Millions of customers were using the platform. Hosts were making some extra cash and tourists were staying like locals. It was a big win-win. It was a win, win, win, win, win,  everyone was winning hashtag winning. 

The fantastic success of their platform also allowed Brian, Joe and Nathan to use Airbnb for good. To step in for instance, and help people fleeing from natural disasters to stay in Airbnbs at no charge.

[SOT Hurricane Sandy news clips] Hurricane Sandy tore across the East Coast, causing an estimated 50 billion dollars in damage. 

100 homes gone, and when disasters like this strike, many people find themselves in need of temporary housing and space to figure out just what’s next. Airbnb.org’s emergency response program helps connect people to temporary places to stay in times of need.

TY MONTAGUE (VO)  

But it only took a couple of years until that big problem we mentioned began to surface.

MUSIC: “Small World Reveals” By Blue Dot Sessions

[SOT CNBC] Senator Elizabeth Warren calling for a probe of the company and other similar businesses, she’s claiming it takes away from long-term renters and inflates prices. 

TY MONTAGUE (VO)  

By making it possible to stay in a home where the owner wasn’t present Airbnb, hopefully inadvertently, made it possible to become a professional Airbnb host. In other words, to host for a living sometimes in multiple properties. 

[SOT Airbnb Protest] The property owner knows that they can make that much more renting to tourists through Airbnb than renting to a permanent tenant. 

And so, unfortunately, what we’re seeing is not only a landlord deciding I’m going to convert this unit to an Airbnb instead, but people who gobble up multiple units and realize, oh, this is a great business model.

TY MONTAGUE (VO)  

By 2016 mounting evidence correlated Airbnb rentals with rising local home prices and rent prices. More houses listed as short-term rentals meant less available housing for locals.

As much good as Airbnb was doing by housing disaster victims, it seemed like more harm was being done by displacing people from their homes and communities because of the rising cost of local real estate.

How can you feel like a local, as Airbnb advertises, in a neighborhood without any more locals?

At this point, I started to suspect some BS, but maybe a more nuanced form of it, one where the gap between word and deed was unintentional more of an unforeseen side effect of their success.

To check my math, I decided to reach out to an Airbnb data expert, a New Orleans neighborhood sustainability organization, and a New York city Councilman. What I learned from these experts changed my perspective a lot. 

INTERSTITIAL MUSIC

TY MONTAGUE (VO)  

AirBnB says their purpose is to “create a world in which anyone can belong, anywhere.” But is that true, or is it just a bunch of bullshit? 

Get out your BS detectors, folks, and give your spare to your neighbor cuz this story affects the whole community. 

More discoveries about Airbnb, right after this..

Before you head to the break, we’d love to hear what you think about the show. Maybe you were inspired to take action, maybe you disagree with today’s bullshit rating. Either way, we want to hear about it. Leave us a message at 212-505-2305 or send a voice memo to cbspodcast@cocollective.com. You might even be featured on an upcoming episode. 

INTERSTITIAL MUSIC

TY MONTAGUE (VO)  

Welcome back. To help me decipher the data around short-term renting, I reached out to Murray Cox, founder of an independent data platform called Inside Airbnb. 

TY MONTAGUE 

Murray, thanks for doing this and welcome to Calling BS.

MURRAY COX

Thanks Ty, I’m excited to be on the show.

TY MONTAGUE 

So to start out with, I’d love to have you just tell our listeners a little bit more about yourself and your work.

MURRAY COX

Um, sure. I started a project, Inside Airbnb, back in 2014 and I launched it, in February, 2015. And it contained initially data for New York City on all the Airbnb listings across the city. And the platform had tools that let you drill into the data. So how many of the AirBnB listings were entire homes versus private rooms.

TY MONTAGUE (VO)  

Murray made all this data available for free and over the years, he’s expanded to other cities as he’s received requests from municipalities and journalists. Today, he collects data from more than a hundred cities and keeps tabs on countries as well.

TY MONTAGUE 

What motivated you to, to take this project on?

MURRAY COX 

Well, I think originally it was just curiosity. I had, um, I had just completed a summer camp on gentrification in Brooklyn. 

And so I was thinking about maps and statistics. And then I just read a couple of articles about Airbnb in San Francisco and New York. And they were using data in their reporting and it left a lot of questions unanswered. And so I just wondered whether for my own neighborhood, whether I could collect some data just to see what it said. And, for my neighborhood which was Bedford-Stuyvesant, the majority of listings were entire homes, people had multiple entire homes.

And I thought that there was just a story there that needed to be told. And that was the original motivation.

TY MONTAGUE 

So that word gentrification gets used a lot. Would you mind explaining what you mean when you use that term, gentrification?

MURRAY COX 

Yeah, I think that there, there are different interpretations of gentrification. But primarily it’s higher-income class of people moving into a neighborhood. There’s racial gentrification. Sometimes people use, um, the cost of housing. So whether rental prices have gone up as a indicator of gentrification. On the subject of whether Airbnb is causing gentrification, I think it’s important to have a nuanced understanding here.

TY MONTAGUE (VO)  

There are a lot of factors at play in gentrification like housing policies, property investors, and tourism. But in talking about gentrification, Murray introduced me to another related term – touristification – the effect tourists have in places that are seeing an expansion of visitors and the relationship between an uptick in tourists and their impact on the housing market.

MURRAY COX 

In some cases, Airbnb is causing gentrification or this touristification. Sometimes they’re contributing to it, and so I think the story is different, depending on where you look.

TY MONTAGUE 

Right. So, the market that Airbnb took on originally was part of the, you know it was commonly referred to as the sharing economy and it was originally intended or at least they said for home-sharing. And it sounds like what you’re saying is this is no longer true. This idea that you would rent a room in a host’s house and in so doing meet the host and actually have an actual experience with a local person. And it sounds like that is less and less the case on the platform, is that true?

MURRAY COX 

In preparation for the show. I went back to the way back machine, the internet archive, where you can look at a site in history.

It’s really interesting, but, um, I looked at the Airbnb website in 2009 and the homepage that comes up, the first featured property, is a property in New York City. You click on it, you can see it, they call it “entire place”. And the host describes their space as, I’m not even in the flat, I’m not going to bother you.

So even, the design of the website back in 2009 was such that they had different categories of listings. They had a category called private room where you are sharing the space with the host, but they also had this category of “entire place”. And over the years it came to dominate.

TY MONTAGUE 

So let’s talk about that. So I think of Airbnb as like a disruptor of hotels. And you kind of go in, in the back of your mind. Well, that’s not necessarily a bad thing because it hotel creates a kind of generic experience.

And if I use AirBnB I’m contributing money to a local, um, homeowner and supporting the local economy and also having a local experience. But it sounds like these whole home rentals are having a bigger effect on real estate values in the neighborhoods in which they are most prevalent.

MURRAY COX

The first thing that you said, you perceived that Airbnb was disrupting the hotel industry.

TY MONTAGUE 

Yes.

MURRAY COX

And I think that was a very common perception, even when I first started my work, most journalists were saying it was a battle between Airbnb and the hotels. Ok, so that is valid. 

But where is Airbnb getting their rooms from? If they were getting them from spare rooms, okay, that’s one thing. But if they’re getting them from entire homes and apartments that no one can live in while the guest is staying there and in many cases, they’re being rented out full time. Then it doesn’t become a battle just between the hotels and Airbnb. It’s a battle between Airbnb and the cities. 

TY MONTAGUE (VO)  

When an entire home is rented on Airbnb full time, one unit of housing is taken off the market, housing that would otherwise go to a local person who needs a place to live.

MURRAY COX 

Frequently you get some arguments from Airbnb and the hosts and lobbyists that say, look at the economic benefit that we’re adding to neighborhoods, people that are spending money. Then the first question is that those people might’ve stayed in a hotel anyway. And then second question is, how much does one resident, if they’re displaced, how much do they contribute to the neighborhood? And it’s usually hundreds of thousands of dollars they’re contributing to the local economy.

TY MONTAGUE (VO)  

To be fair, the company is certainly not the only reason for  gentrification and often Airbnbers want to be in neighborhoods that are already gentrified. But evidence does suggest that AirBnB is a meaningful and growing part of the problem. 

TY MONTAGUE 

So on this show. We’re, we’re focused on, you know, what we call purpose-led companies and Airbnb is certainly one of those.

They say their purpose is to help anyone feel like they belong anywhere, but if it turns out that Airbnb is causing gentrification in neighborhoods and forcing locals, who are the people who made the neighborhoods so interesting in the first place to be forced out, that’s basically the opposite of their mission. So looking at it that way, how big a problem would you say this is?

MURRAY COX

Well, I I think if we look at Airbnb’s purpose or mission to allow people to live like a local. The first part of that I think is the impression that you’re staying with a host.

TY MONTAGUE 

Right.

MURRAY COX 

So if the majority of listings are entire home apartments, Um, sometimes almost all of them. I think they’ve failed to that aspect. You know, you could argue that, in an apartment, as opposed to a hotel, you can bring your family, you can cook. You could argue, okay, they’re meeting their mission there, but at what cost? And when you’ve displaced residents, and in many cities around the world, the social fabric of the cities are changing from tourism. 

What I found as I talked to residents in cities like Barcelona, Amsterdam, Venice, Italy, is that the city starts to change. In Venice on any single day there’s more tourists in the city than there are locals. There’s about 55,000 locals and the population has been falling. Once you get to that stage, um, commercial businesses change. 

TY MONTAGUE (VO)  

Changes like instead of a local hardware stores or a supermarket, more bars, restaurants, and nightclubs will open up and this touristification of cities means that they become almost, two dimensional, Disneyland versions of themselves.

MURRAY COX 

And I think if you’re, if you’re talking about tourism sustainability, from a long-term point of view, surely that would be an unsustainable type of tourism. 

TY MONTAGUE 

Right.

MURRAY COX

You know, I think we need to decide what we want our cities to be. Do we want them to be livable? Do we want them to be diverse? Do we want people that work in a city to be able to live there also, or born in the city to be able to live there? 

TY MONTAGUE 

Yeah. And, and, and there’s an additional issue, which is, you know, these almost professional hosts. Who are in some cases, just big groups of investors who have raised a bunch of money and gone out and bought hundreds of properties in an area.

And that, that starts to get strange to me. It’s kind of a hotel that has been broken into pieces and scattered throughout a neighborhood in a way.

MURRAY COX

Yeah, I think this is happening worldwide. There are multinational companies that have raised money. Airbnb’s invested into some of them. I belong to some Facebook groups where hosts talk about investing in properties. And some of them have seminars and how to create a property portfolio of Airbnb’s. And in many cases, they’re controlling hundreds and sometimes thousands of properties. 

TY MONTAGUE (VO)   

Sometimes they’re even doing it under the radar. For example, in New York City, at one point there were hosts renting out hundreds of apartments even though New York has a “one host, one home” policy. One host managing hundreds of properties is illegal to ensure that there’s enough housing for everyone. But compliance with this rule has been an uphill battle.

MURRAY COX

How does the city enforce that? Um, they don’t know anything about the host. They go to the Airbnb website and there’s an approximate location. The host only has a first name that could be made up.

They were mainly relying on complaints from neighbors saying, I think someone’s using…

TY MONTAGUE 

Right, yeah. There’s all these strangers wandering around in my building. I think there might be an Airbnb here.

MURRAY COX

Right. But if you consider going back to 2016 or 2017, when we’re talking about this period in New York city, there’s 50,000 Airbnb listings, about 25 or 30,000 of them were entire apartments. A massive amount of housing was being taken, taken off the market, and there was really no efficient way to stop it.

TY MONTAGUE (VO)  

New York even went so far as to sue one of these illegal operations, and during that case, Airbnb actually admitted that although they work to take violators down, they could no longer stand behind the “one host, one home” policy. All of this made me wonder about AirBnB’s real intention with regard to their mission. 

TY MONTAGUE 

My opinion going into this episode was that this effect, the effect that they’re having on local neighborhoods is unintentional, they didn’t design the platform to do this. But they also didn’t design it to not do this, obviously. So what is your opinion about that? Was this intentional on Airbnb’s part or is this unintentional? 

MURRAY COX  

So when we look at the history of Airbnb, by 2009, they’ve received $600,000 in investment, 2011, they got $115 million in investment. And 2013, 14, and 15, they’re raising millions of dollars,  venture capitalists, like Sequoia capital, Andreessen Horowitz. They’re in the boardroom of Airbnb and they’re talking about their business. And Airbnb is talking about all the regulations. They’re talking about, that entire homes are being rented out for more, that the market seems to be driving towards entire homes. I can bet you that the founders, the founders, and the funders would have said we need to maximize the revenue.

In 2010, New York City, they were considering legislation to make it clear that people in apartment buildings couldn’t rent out, short-term while they weren’t present. And Airbnb lobbied against that. They must have known it would have been bad for business. 

MURRAY COX 

If they just cared about home sharing or private room rentals, they wouldn’t have opposed that. In January 2013, Airbnb is aware of the problem. It lobbied and spoke out publicly against the passage of the New York State law in June of 2010, that banned a particular yet very popular type of short-term rental in New York City. But they didn’t even make changes to their site when the law went into effect. They didn’t advise their hosts. I think it wasn’t until 2014, that there was a settlement agreement between Airbnb and, um, the New York state attorney general, where Airbnb said, okay, we’re going to educate our hosts about this new law. So that’s almost three years later. I think , all that, um, evidence shows that Airbnb knew about it, they were trying to fight it. And when cities sign laws, they don’t respect them.

TY MONTAGUE 

Right. So I want to pivot to the topic of cooperation. You wrote a report in December of 2020 called Platform failures: How short term rental platforms like Airbnb fail cities and by cities, you mean globally, this is happening. And there were a few things that jumped out at me. So in June of 2019, Airbnb publicly said we’re eager to work with our host community as well as city and state governments on clear and fair regulations for short term rentals in New York. But in your report, you indicate that they say they want to cooperate, but they’re actively uncooperative. What are, what are some other examples of them saying one thing, but doing another?

MURRAY COX 

To understand why this is important you have to go back probably a few years when cities like Portland and San Francisco started introducing their own registration systems. 

Initially, when the registration systems were introduced, they got very low compliance. So the host’s just refuse to register. In fact, after San Francisco introduced its own registration system, Brian Chesky, the CEO of Airbnb, used to rent out his own apartment on Airbnb, maybe when he was away. He didn’t register with the city, even though there’s a mandatory registration system. Right. And so, uh, even a year after these registration systems were introduced, the city found that there was, um, only about 10 or 20% of hosts had registered. 

TY MONTAGUE (VO)  

Wanting to introduce some accountability, San Francisco introduced a fine of a thousand dollars a day per unregistered listing. At the time thousands of hosts were unregistered. In response Airbnb sued the city, eventually reaching a settlement and making registration mandatory for all hosts. 

Today lots of cities use registration to help gather data, enforce regulation, and collect taxes. But still, Murray says, many Airbnbs are illegal.

TY MONTAGUE 

In the report that you wrote Platform Failures, I think you say something like 60% of the listings in Paris, 80% in Berlin, and 85% in New York City are illegal. So this is a pretty big, a big problem.

Who ultimately is responsible for complying with regulations? Is it, is it the platform? Is it Airbnb or is it the host themselves? Like where do you place the responsibility?

MURRAY COX 

I mean, I think that there’s a legal obligation and then this, you know, ethical and moral obligations.

TY MONTAGUE 

Moral, right? Yeah, exactly.

MURRAY COX 

So these are complicated questions. I think in the case of Airbnb, they knew that this illegal activity is happening. It’s a majority of their business. They’re profiting from it. They have an ethical obligation to do something about it. They have an ethical obligation to be honest about it. They haven’t been honest about it. They don’t disclose any data. They spend a massive amount of lobbying that says that these are just people trying to, um, make an extra buck. They need this extra income to stay in their homes. They’re really just lies. You can’t pull Airbnb’s moral heartstrings and expect them to react, right. Because they’re not that type of company. 

TY MONTAGUE 

Yeah, it seems to me if Airbnb were a good company, a company that, that really has a sense of moral obligation beyond it’s kind of legal obligations. It seems like this is a real opportunity to proactively get ahead of regulation. In other words, to stop seeing cities and towns as adversaries, and instead, start to actually collaborate with them. And with activists like you to solve this problem. Is that just a pipe dream or is that kind of collaboration happening anywhere in the world?

MURRAY COX 

I say it’s not happening at all. Brian Chesky says, in August 2020, this was after COVID Brian Chesky thinks Airbnb might go down. They’ve had to get loans. They’ve laid off 25% of their staff. So maybe it was an emotional time for him, but he says, we grew so fast. We made mistakes. 

[SOT Brian Chesky] I want to acknowledge something. If I could have done Airbnb all over again, I would have designed Airbnb with more stakeholders in mind including communities. I was 26, I didn’t really understand some of the things I understand today.

I don’t think any tech, CEO, should say they’re inherently making the world a better place. We have to acknowledge that there’s unintended consequences, the products we’re making, and that we have to institutionalize our intentions to serve multiple stakeholders.

So I work really hard with our team to try to make sure we’re having positive impacts on communities. We’ll make hard decisions when we have to. And fundamentally, I think our relationship with cities is going to change.

TY MONTAGUE (VO)  

All the evidence Murray provides is pretty damning, but when I hear Chesky talking about it, it feels like he’s maybe trying, I don’t know. It seems more like Airbnb just hasn’t come to grips with how to really do their purpose.

TY MONTAGUE 

You know my wife and I have an Airbnb in, in the Catskills and it’s a detached home. We use it as a guest house when we have guests who come and visit us in Pennsylvania. But the rest of the time it’s on the Airbnb platform and doing this episode has really caused me to question the ethics of that. We haven’t taken it off the platform yet as of this recording, but it is something that we are thinking about and talking about. How do you feel about that? You know, Airbnbs in rural communities, is it ethical to operate at Airbnb in the way that we are or would you say it’s unethical?

MURRAY COX 

I don’t think it’s, it’s not necessarily unethical. I think it depends. You know, I would probably think about, understanding what the housing pressure is.

Because I think, especially in a place like the Catskills you don’t want the housing prices to go up for regular people that live there. You don’t want the, the city and towns just to depend on tourism. I think there should be investment in other industries, maybe trying to form land banks or other things that provide housing, maybe advocate for some type of rent regulation so that people can still live there. 

TY MONTAGUE 

And just, you know, for the record, we are registered, so fully, uh, fully compliant. Very, very helpful, uh, to, to really think through the kind of ethical implications.

Okay, Murray two final questions for you, first of all, if you could tell Brian Chesky to do one thing or maybe just a handful of things to change, to better live out Airbnb’s purpose. What advice would you give him?

MURRAY COX 

The founders of Airbnb are in a unique situation, even though they went public, they still own almost 44% of stock. They have 20 votes, more than a regular shareholder for every share that they own. So they’re in a unique position that they could even overrule some of the investors.

So my advice would be stop suing cities, stand down your lawyers, stand down your lobbyist. In some cases, they’re trying to get preemptive laws and state legislators stop doing that. Stop their political donations, especially in locations where they’re lobbying for de-regulations. I believe every city should be able to decide for themselves what the regulations should be. And I, you know, I think they could set up some independent regulatory councils or sustainability councils, but, but looking at real long term sustainability of their business. And they should also share data with cities so that cities really understand what’s going on.

TY MONTAGUE 

A hundred percent like the, the, the cost of doing a census, right. Which only happens every 10 years is like in the billions. And Airbnb is sitting on this trove of data. That would be incredibly valuable for municipalities. Yeah. I love those ideas. So Murray last question, and this is one, we ask every guest on this show.

BS RATING THEME MUSIC

TY MONTAGUE 

We have on calling BS, something called the BS scale. And the scale goes from zero to 100. zero being the best zero BS and a hundred being the worst complete BS. Airbnb says its mission is to make everyone feel like they can belong anywhere. On a scale of zero to a hundred, what score would you give Airbnb?

MURRAY COX 

Right. Well, I mean, I really want to give them a hundred, because I’ve been fighting them at every turn, but I want to be a little bit more analytic. So if we consider the, maybe about Um, 20% of their revenue is real home-sharing. You know, I’m being generous there, but I’m going to penalize them because they pretend that that’s a hundred percent of their business or a real large proportion. 

TY MONTAGUE 

Right. So I’m going to discount that to 10% and therefore I’m going to give them a bullshit score of ninety.

All right. I love that you actually used data to arrive at that score. Very good.

Murray, I want to thank you for being with us today. This was a great conversation. I also want to thank you for the work that you’re doing at Inside Airbnb, very important.

MURRAY COX 

Great. Thanks Ty. And, and I appreciate this podcast and what you’re doing to really call companies into account from a different direction than the work that I’m doing.

INTERSTITIAL MUSIC

TY MONTAGUE (VO)  

Folks, it is time to make the call: is Airbnb really “Making everyone feel like they can belong anywhere?” 

Based on what I’ve heard so far, I’m calling Bullshit – but with an asterisk. 

In the cases where the host is an individual renting out their space, Airbnb really IS helping guests feel like a local and providing many of these hosts with income they might not otherwise have. 

On the other hand, it feels like they’re using these local hosts as convenient PR figleaf, since the vast majority of Airbnb listings are whole homes, frequently homes owned by companies for the sole purpose of renting on Airbnb. Using a small fraction of their hosts to mask the real story, avoiding transparency – and only holding themselves accountable some of the time.  

So with that mixed diagnosis, next we’ll hear from two experts in city planning and housing justice on solutions for Airbnb to do better. 

Right After the break. 

INTERSTITIAL MUSIC

TY MONTAGUE (VO)  

To figure out where Airbnb might go from here, we’ve assembled a small panel of experts and asked them to propose some concrete ideas for Airbnb to move the needle in the right direction. 

TY MONTAGUE 

So, first up, I want to welcome Veronica Reed, who is the executive director at Jane Place in New Orleans. Veronica, welcome to the show.

VERONICA REED

Thank you for having me, Ty.

TY MONTAGUE 

So, I’d like to have you start out by just telling our listeners a little bit about your background and the work that you’re doing at Jane Place.

VERONICA REED

Sure. Um, I’m the executive director of Jane Place. I’ve been in my position for two years and prior to my coming on board, Jane Place and a group of other advocates focused on short-term rentals in the city of New Orleans. It was part of a broader strategy of work that we do as both a community land trust and an organization that works with tenants, focusing on tenant rights in the city of New Orleans.

TY MONTAGUE 

That’s great. And you said you used a word there that listeners may not be familiar with a “land trust.” Can you explain what a land trust is?

VERONICA REED

Sure. A community land trust is a non-profit that owns land and uses a lease strategy to reduce the cost of ownership, whether you are a renter or a homeowner because the cost of property is removed from the equation.

TY MONTAGUE 

I see. So you’re actually creating low-cost housing yourself at Jane Place. 

VERONICA REED

Yes. We’re an affordable housing developer. Yes.

TY MONTAGUE 

That’s great. Okay. We are also joined by former New York City, Councilman Ben Kallos. Ben, I want to welcome you to the show.

BEN KALLOS

Thank you for having me.

TY MONTAGUE 

So Ben, can you talk a little bit about your background?

BEN KALLOS

Sure I’m a software developer. I’m an attorney. And most recently I’ve been a New York city council member representing 168,000 people on Manhattan’s upper east side in a city of 8.8 million. And, uh, my claim to fame is I wrote the law in New York City to regulate Airbnb. And part of what made me run for office and write this law is that the rent is too damn high.

TY MONTAGUE 

Right. So, let’s get right into some ideas for fixing that problem. Veronica, I’m going to ask you to go first in two minutes or less, what is the number one thing that you think Airbnb should do to better live, their purpose, which is to help everybody feel like a local.

VERONICA REED

I’d like to say two things, the one thing that they could do is be a better partner with the city. And what we need is, for Airbnb to have a field on all listings that shows the permits both the operator permit and the, um, permitting for the unit. Cause right now, it’s not a requirement.

So there’s no way to tell whether it is a legal, short-term rental or not. And what we believe is that there are a lot of listings on Airbnb across the city of New Orleans that are not licensed. And therefore the city is losing potentially millions of dollars in, um, permitting fees annually. And we’re just a city that cannot afford to lose those fees.

TY MONTAGUE 

Right. So you’re saying change the platform to make it easier for you to collect the taxes that are due uh, the city. Is that right? 

VERONICA REED

Correct. Modify the platform.

TY MONTAGUE 

Yeah. Okay. That, that makes a ton of sense. All right. Ben, you’re next, what is the number one thing that Airbnb should be doing better to deliver on what they say they stand for?

BEN KALLOS 

The biggest bullshit of Airbnb is this whole focus on their hosts. And if it was about the hosts, there wouldn’t be a button to click for whole-house rentals. If it was really about the hosts. If it was really about connecting people and helping people to feel local and having the, the local, uh, host show people around then the only thing on Airbnb would be hosted stays, and that’s actually where New York City may end up.

TY MONTAGUE 

Yeah. So there’s a distinction between owner, owner hosts, who actually are, are living in the property that they’ve put on Airbnb.

And then there’s another kind of gradation, which is companies that are buying up properties and operating in some cases, hundreds of properties on the platform. Short of banning those rentals, which you could  absolutely do. Is there anything else that Airbnb could, could do in New York City?

BEN KALLOS

So we have a law going into effect. We learned lessons like from jurisdictions like Louisiana. So hosts will require be required to have a registration number, a platform where we required to verify that that that registration number is valid before they can process a listing. 

And, what the city will be doing is going into regulatory process. And we know that the state law here says that, uh, you can have a hosted stay. You can have a hosted stay for less than 30 days. Uh, you can rent your apartment for longer than that and put it into the market. And one of the questions that will be determined as the city issues regulations is whether or not single-family homes are a building that a person can rent out entirely, or if those have to be hosted too. So ultimately we’re actually asking Airbnb just to follow the state law. 

But I’ll tell you, uh, I went to visit London, it’s a very expensive city, but there are no options in London to rent an entire unit. So they’ve done it in other jurisdictions where their laws were stronger and they can do it here and they can do it in Louisiana too. They can follow the law.

TY MONTAGUE 

Yeah. Thank you for that. Both really interesting takes on, on things Airbnb could change. As I thought about this, the first thing that occurred to me is that Airbnb has already gotten into the real estate development business through, I guess I’d call it a side hustle called Backyard.

They’re actually building housing of various kinds that are air quotes, you know, Airbnb friendly. And so they’re in a great position to actually begin to directly solve the housing scarcity problem that they themselves are creating. So I’m going to call my idea Local Love. So imagine with the Local Love initiative, Airbnb would begin to finance and build net new low cost housing in the neighborhoods

hardest hit by gentrification. Local love would be funded either by essentially taxing part of the profits, the platform is making locally. Maybe it’s by sharing the financial burden between the platform and local hosts, especially hosts who have more than one property on the platform. And since, you know, presumably, the local tax base is going up due to gentrification maybe we could get municipalities to also share part of the burden? You, you both will be the experts there. but my idea local love would create affordable housing to preserve local communities and wherever possible, create housing that is in itself, Airbnb friendly so that it also helps some low-income folks to begin to actually become Airbnb hosts and supplement their own income.

So, what do you both think of that idea? Any love for local love?

It’s okay. If you hate it, just tell me.

Veronica Reed: I don’t hate it. I think the issue is that you have to have the available, um, like, uh, properties for infill, um, at, at, at a scale that makes a difference, right. Because when we talk about the need for housing development here in the city, we talk about the 33,000 units would solve our affordable housing issue. But the thing is, is that we can’t build 33,000 units to solve that issue.

We have to look at what’s already here to solve the problem.

BEN KALLOS

Veronica is right. It’s about where to build. 

I think that your idea could work in some places where they don’t have the money to build the affordable housing. And, uh, Airbnb might be interested in having more hosts in the Catskills, which at least during this pandemic has become a destination for families who need to get out of the city. And they might want as much money coming in from urban areas, uh, as possible. So it could be a boon for parts of this, uh, state parts of this country that have seen abandonment because the jobs just weren’t there.

TY MONTAGUE 

That’s interesting. Yeah. So maybe it’s, maybe it’s not in New York and not in New Orleans, but it’s maybe, maybe it’s an idea that could work elsewhere. Um, Veronica, I want to build on your idea a little bit, cause, cause it seems to me that what lies at the center of what you were advocating for is transparency. Um, just another flavor of transparency that I wanted to, put out there and see what the two of you think of. You know, right now the, the platform, there is a reputation grade that you get on the platform, right? Uh, hosts, grade guests, guests grade hosts, and, and there’s a whole hierarchy that’s created there already on the platform.

What if we graded hosts on another dimension, which is the impact that they are having on the local economy. What if, you know, a green listing is a host that lives in the property, a yellow listing is a non-resident host who owns, you know, maybe one property at most, a vacation home or something that they have on the platform. And a red host would be anyone who owns more than one additional property, or maybe it’s more than two or three. I don’t know where the line is, but what about grading hosts? Just so that guests can see clearly the impact that they’re having on the local economy, through the choices that they’re making and they, they could still choose to rent from, um, you know, in quotes, professional hosts that is causing gentrification if they want to, but they at least have the choice to vote with their wallet and, and go with a green host who is actually benefiting, or at least not harming the local economy. 

VERONICA REED

Well, the, the skeptic in me says the guest has to care. Um, and I don’t know that Airbnb guests care at that level, but I do believe that neighbors would care about that information. Neighbors who have problems with Airbnb on their block or across the street would probably be very interested in that type of information.

TY MONTAGUE 

Right. Ben, what do you think about that?

BEN KALLOS

I’m concerned that ultimately if people are approaching it in an economic sense, they are looking for an unhosted stay.

If you’re a family bunking everyone into a room with two queen beds. Doesn’t quite work. We haven’t really seen, uh, the hotel market really adapt to the way people are now traveling today. Uh, but ultimately I don’t think that a person looking for an unhosted stay is going to care whether that metric of a green, yellow, red, uh, is there.

So I think if we’re using metrics, it needs to be something where the consumer is going to care, or there is an impact for having a red flag.

TY MONTAGUE 

What if it was two ways and the badging was both for guests and hosts?

So if you had a tendency to  stay in a local friendly manner, stay in, you know, owner operated, Airbnbs, um, you know, you would be a local friendly guest, or maybe you get a local neutral badge or you get a local unfriendly badge because of the way that you use the platform.

And there are, you know, commensurate, I don’t know, awards for being local friendly. Do you think that would help? 

VERONICA REED

I think we’re talking about semantics here, because for example, here in New Orleans, we have, um, uh, residential licenses for short-term rentals. And those are all supposed to be owner occupied in residential neighborhoods.

And so, in a sense what you described should be happening already. But we know that’s not the case.

TY MONTAGUE 

Right, let me shift gears here a little bit. Um, and just pick up on another thing that Airbnb says. They, they have said as a part of our commitment to our stakeholders, we commit to communities as well as to host, to strengthen the communities that we serve. 

What are some other ways that Airbnb could actually strengthen a community rather than weaken it?

BEN KALLOS

New Orleans, New York city, very crowded places, in New York city this morning there were 14,578 children who woke up in a homeless shelter because they just didn’t have a home. 

And right now we have 20,000 Airbnbs where it’s the entire unit for rent. And so Veronica is talking about 30,000 units would solve the housing crisis in New Orleans. If we got these 20,000 units back and could even put it towards homeless services and giving affordable rental to these families it would be a complete game changer.

And I think if they could have an honest conversation with New Orleans and abide by their laws, that they had had an honest conversation with New York city, uh, I think we’d all be in a very different place, but they haven’t been interested in that. They’ve been interested in the profit motive.

TY MONTAGUE 

Right. Yeah. And, and look, I completely understand that both of you are kind of skeptical that Airbnb is going to do anything on its own to solve this problem. But I do want us to suspend our disbelief a little bit and dream about if we were in charge – if we were Brian Chesky for a day – what are the ways in which we would change the platform to begin to strengthen our local communities?

Um, you know, go ahead.

BEN KALLOS

if we’re going to change it fundamentally, if we, if we have the magic wand, it really starts with really making it about the hosts. And saying come stay in Brooklyn, uh, or the Bronx or in Queens, and this is what you’re going to have for breakfast. You’re going to stay with a Haitian family or a Greek family or a Russian family and what you’re really signing up for is this host who welcomes you to feed you to really be part of it. But it also means a change in the compensation and a change in what hosts are doing and a change in the listing where you’re actually looking at the listing and you’re not looking at, which is the least expensive, which has the most bedrooms, but which has the best host whose going to show me a great time while I’m there.

TY MONTAGUE 

Yeah. That sounds right to me. I want to circle back to the thesis of this show, which is that there are certain companies in the world that are, we call them purpose led companies. And Airbnb is a company that we would characterize as being a purpose led business So they are, they are trying to help people have, you know, I’m paraphrasing, but have local experiences. it says that on the label. And so at some level, a really good purpose led company should because they say it on the label should actually try to make that real. And so what I’m saying is Airbnb really should be self-regulating. Right. They really should be. They shouldn’t be forcing the two of you to take them on and to pass laws. They should see the problem that they’re creating, that the. You know, the degradation of the local feel of the neighborhoods that, that in many cases they’re doing business in is actually bad for the neighborhoods.

It’s bad for the city. It’s ultimately it’s bad for them. Because if New Orleans stops feeling like New Orleans, people aren’t going to go there as much and Airbnb will suffer. Right, and they’re now in a place where they’re creating harm and. And, you know, so what we want to explore here is what should they do to heal it? Right? Um, and, and collaboration with folks such as yourselves who are, who are engaged in your local communities, seems like a good place to start.And, and so at the end of the day, what would be the economic impact to Airbnb if they just banned those more professionalized or corporate hosts? If Airbnb said it is illegal to put more than, uh, one property on the platform?

BEN KALLOS

I think that’s where Airbnb is headed in New York City. They would go from having 38,000 units, to about 18,000 units. And that’s still a huge number of units, a huge amount of profit, but it would completely change things. And that would be enough units leftover to house, every homeless family in New York City. 

TY MONTAGUE 

Let me, um, add, uh, a sort of idea log to the fire here. Airbnb has given rise. It seems like to a new ecosystem of companies. So, there are these new hotel slash short-term rental companies or kind of urban development companies that are being created like Saunder is one of them; Ariva, Nativo, Blue Ground. And it seems like these companies are creating, you know, entire home style hotels. In other words, kind of a hotel cobbled together from individual, uh, homes and are also developing apartment buildings that are designed so that anyone can rent their apartment on Airbnb while they’re away. Are these companies part of a potential solution or are they just a bigger part of the problem?

VERONICA REED

They aren’t part of the problem in terms of displacement, because our local residents would not be living in those units. because they’re not affordable to local residents. But one of the things that could be of value is that there was a sort of affordable, like for every commercial unit there could be some, uh, contribution to an affordable housing fund that could help support the development of affordable housing in neighborhoods. Because there are thousands of commercial short-term rentals in the city of New Orleans.

TY MONTAGUE  

Right. I mean, that’s kind of where I was trying to go with Local Love is, is actually funding the creation using current units to fund the creation of affordable housing. 

Okay, is there anything that I haven’t asked either of you today that you wanted to mention or talk about in regard to Airbnb.

VERONICA REED

Well, I’d just like to say that we do believe that our, the low, the change in local regulations here has had a positive impact. And so, um, since the change in the regulations, um, we have definitely seen, um, folks return to neighborhoods and that’s important.

Um, and we hope that, um, that will continue to be the case.

TY MONTAGUE 

Okay, so, so, uh, last question for both of you, We have a scale called the BS scale. It goes from zero to 100 zero being the best score. Zero BS, 100 being the worst score. 100% BS. So on a scale of zero to 100, how big of a BS or do you think Airbnb is? Um, Ben I’ll, I’ll start with you.

BEN KALLOS

93%.

TY MONTAGUE 

That’s a high score. All right, unequivocal. Thank you. Veronica, what would you give them?

VERONICA REED

Maybe I’ll give them around a 90, maybe a 10%, but that could be a margin error plus or minus, right. So they might be as high as 95. Right. But yeah, 90%.

TY MONTAGUE 

Those are high scores. That’s eye opening for me. It’s funny, cause I entered this episode thinking that they were a lower BS company, but the deeper I’ve gotten into it, the more I’ve started to think, actually it really, you know, it really is about driving max maximizing profitability. And it’s not about delivering on the localness I’m actually really coming around to that point of view. I think the problem is bigger than I thought it was at first. Okay. Veronica Reed. Thank you so much for joining us today.

VERONICA REED

Thank you for having me.

TY MONTAGUE 

And Ben Kallos, thank you for being here. This was great.

I really appreciate your time.

BEN KALLOS

Thanks for having me.

THEME MUSIC: “In Passage” by Blue Dot

TY MONTAGUE (VO)  

I’d like to end the show by giving the AirbnB an official BS score.  The scale goes from zero to one hundred.  A zero means there is zero gap between word and deed, and 100 means the gap is huge — total BS.  

I came into the episode today thinking that Airbnb had a few problems, but I also had the strong sense that their leadership was committed to their purpose and to being a positive member of the communities that they serve. I was thinking about giving them a score, ya know, in the low 30’s.  

But now, like me, you’ve heard our guests today all give Airbnb REALLY high scores. And I have to say, I found much of what they had to say eye opening. Airbnb is in a more serious situation than I initially thought.  I think they’ve reached a crossroads and they need to look inside themselves and make some decisions.  If they change course now, admit that there is a problem, and commit to partnering with cities to solve it,  they can avoid a crisis. But if they continue on the path they’re on, they become more like some of our other ultra-high scorers… pretenders who get dragged through the court of public opinion and then ultimately get regulated. So I’m gonna give Airbnb a cautionary 58. To think that its all Barry Manilow’s drummers fault. Didn’t see that coming. 

TY MONTAGUE (VO)  

To weigh in with your own score for Airbnb visit our website, callingbullshitpod.com. We’ll track their behavior over time to see if they can bring that score down.  You’ll also be able to see where the Airbnb ranks on Bullshit compared to the other companies and organizations we feature on the show.

And If you’re starting a purpose-led business, or you’re thinking of beginning the journey of transformation to become one, here are three things you can take away from this episode:  

1) Design matters.  And the founders of Airbnb went to one of the most prestigious design schools in the world, so they know it. As all of our guests pointed out today, there are functional aspects of the of the Airbnb platform that currently favor shareholders over stakeholders like cities and communities.  When you design YOUR product, design it with all of your stakeholders in mind. 

MUSIC: “The Griffiths” By Blue Dot Sessions

2)  Actions speak.  Airbnb explicitly names communities and cities as stakeholders. They need to walk that talk.  Today we talked about taking actions like banning professional hosts and reallocating housing to those in need. Your actions would undoubtedly be different but the point is, doing is believing. 

3)A principle isn’t a principle until it costs you money. Is Airbnb pro-community or not? Sure, banning corporations from owning multiple properties on the platform would cost Airbnb some money in the short term. But if that action saves the neighborhoods and communities Airbnb is a part of, shareholders will benefit longer term. Making money is a good thing. Just be long-term greedy. 

MUSIC: “Heliotrope” By Blue Dot Sessions

TY MONTAGUE (VO)  

Thank you for joining us today, Murray Cox, Veronica Reed and, Ben Kallos. You can find links to Inside AirBnB, Jane Place, and everyone’s social media our website: callingbullshitpodcast.com. And if you have ideas for companies or organizations we should consider for future episodes, you can submit them on our website, callingbullshitpodcast.com. Special thanks to Davide Prospero and also to AirDNA for providing invaluable insights for today’s episode.

 And Brian Chesky, there is still a tremendous good will toward you and Airbnb out there right now. We’re rooting for you to do the right thing. If you ever want to come on the show to talk about it, you have an open invitation.

And if we made you feel at home today, subscribe to the Calling Bullshit podcast on the iHeart Radio App, Apple Podcasts, or wherever you get your podcasts.  

Thanks to our production team: Hannah Beal, Amanda Ginsberg, Andy Kim, DS Moss, Haley Paskalides, Parker Silzer, Basil Soper and Mijon Zulu. 

Calling Bullshit was created by co:collective and is hosted by me, Ty Montague.  Thanks for listening. 

Before you go, we’d love to hear what you think about the show. Maybe you were inspired to take action, maybe you disagree with today’s bullshit rating. Either way, we want to hear about it. Leave us a message at 212-505-2305 or send a voice memo to cbspodcast@cocollective.com. You might even be featured on an upcoming episode.