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It’s Funny, But Not Ha-Ha Funny

A report from Mission Local in California. “In recent weeks, Mission residents have been receiving curious missives in their mailboxes inquiring whether they’d be game to monetize their kitchens and living rooms by having strangers drop in and start doing office work. As if to clear up any ambiguities, these fliers feature a photo of three young, happy business casual types sitting at a table and peering at laptops.”

“It’s a note from Cobo, a nascent startup hoping to capitalize on what its founder calls “a billion-dollar market”: Placing lonely freelancers pining for company into people’s homes, monetizing that home, and taking a cut.”

“Rafe Oller, Cobo’s marketing head, declined to say much, as a launch is imminent: ‘We don’t want to do advance press.’ When asked if Cobo had done any advance press with this ity’s government, he replied: ‘We’ve been working with the local government, yes.'”

“Well, that’s one way of putting it. When Cobo mailed out fliers to residents of the Mission, Cole Valley, and elsewhere in order to find freelancers willing to pay $10 a day or more to work in strangers’ kitchens and strangers willing to host them — it managed to inadvertently solicit several employees of the San Francisco Planning Department at their homes.”

“It’s funny, but not ha-ha funny, that the two tech startups-turned-titans that currently epitomize San Francisco — Uber and Airbnb — vastly increased congestion in one of the nation’s most congested cities and cannibalized affordable housing in one of the nation’s most unaffordable cities.”

“Their business models were, additionally, strictly illegal under city law. And yet they flourished here regardless, not because of some newfangled technological ingeniousness but good old-fashioned co-opting of politicians and institutions via money.”

“If you or your principal investors aren’t tight with politicians or regulators, and you can’t induce them to look the other way or rewrite the law so as to enable your company (and, in a neat two-for, kneecap your competitors), then entitled and destructive behavior is less likely to be tolerated.”

“And, while Cobo disseminated fliers throughout the Mission, it never contacted the neighborhood’s elected representative, Supervisor Hillary Ronen. ‘I have the same worries I had with Airbnb,’ she says. ‘These homes were not meant to be offices. I worry about it escalating the already egregious cost of housing.'”

“Cobo’s website allows for up to six workers to drop by one’s home for up to five days a week. With this income — plus potential short-term rentals on Airbnb or similar sites — the notion of taking a home off the market and converting it into a full-time office/hotel/not-a-home is hardly far-fetched.”

“Just how Cobo plans to ensure unscrupulous people won’t exploit its site is something city officials would have loved to discuss prior to fliers showering the neighborhood. ‘But that has not been the model,’ says Ronen. ‘The model has been to flout and break laws, get people hooked to the service, and force city government to bend to the will of a scofflaw company by becoming a powerful force in lobbying and financing of candidates and campaigns and politicians in Sacramento.'”

From NBC 2 in Florida. “Collier County leaders are cracking down on people who rent out their homes short term, but the homeowners who are renting said that there are benefits to the visitors and the county. Bill Archer rents out a few of his houses to people who are looking forward to soaking up the sun in Naples.”

“‘You upload the pictures, it goes out there, and it goes all over the world, and people see your property,’ said Archer. ‘We look at it as an investment. We wanted to get into the market.'”

The Mount Desert Islander in Maine. “Property owners hoping to begin renting to vacationers this summer may be out of luck, depending on the outcome of a Town Council vote. Town Planner Michele Gagnon proposed an emergency moratorium on new, non-hosted vacation rentals.”

“The rise in non-hosted vacation rentals, Gagnon wrote, has ‘result[ed] in the loss of affordable housing, negative impacts to adjacent properties, constant turnovers in the high season and dark vacant homes in the low season.'”

The Star Telegram in Texas. “When Kari Garcia saw the north Arlington home across the street transformed into an Airbnb listing, she was stunned. In what had been a historically quiet neighborhood, large groups began staying at the house for everything from family reunions to football games at AT&T Stadium, she said.”

“She has had little recourse since the homeowner lives out of state. ‘We’ve had party buses parked across the street and anywhere from four to 12 cars parked in the neighborhood,’ Garcia said. ‘I can’t let my kids outside to ride their bikes and shoot hoops. It doesn’t feel safe anymore.'”

From Fast Company. “HomeShare has cut a majority of its staff, reports the San Fransisco Chronicle. The San Francisco-based startup matched applicants who lived in luxury apartment buildings with roommates with the goal of helping people find more affordable housing in some of the most crowded housing markets in the country, including San Fransisco, Seattle, and New York City.”

“The company’s CEO Jeff Pang wrote in a blog post that the company was jettisoning its role as a middleman payment processor and laying off most of its staff ‘due to unforeseen financial constraints.'”

“‘Based on feedback from customers and partners, acting as a middle-man for payments was adding complexity and confusion to the billing process. As a result, we decided to remove ourselves from the payment flow so that residents could pay leasing offices directly.'”

“As for HomeShare, it’s not shutting down entirely, but Pang notes there are some rough times ahead as it looks to get back onto its feet and win back the trust of its users: ‘In all candor, it has been a tough few weeks for our community of partners and residents. However, I’m hopeful that this difficult month of transition will be followed by a simpler and better customer experience. Over time, we will strive to serve customers and earn back any lost trust.'”

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This Post Has 36 Comments

    1. Can you stop using crater for every post. A sliding scale would be more appropriate. 0-5% maybe use… “down”. Then 6-10% maybe “slumps”. Then something else for 11-15% and finally save crater for something north of 15%. I would say only 20-25% or more is crater worthy. Your posts wouldn’t be so stagnant and eye rolling. 10% is just not a crater.

      1. That’s the least of the problems with his posts. He apparently believes unit mix and average size is irrelevant to valuation.

        1. unit mix and average size is irrelevant

          You’re thinking like a Realtor. The important thing to watch is sale price and sale price alone. In the mania people will pay as much as they can get away with because they believe they will make more money that way. It doesn’t matter if it’s an egg carton row house or a McMansion with more bathrooms than bedrooms. If people are not willing to pay more and more then the gas is coming out of the balloon.

          The housing mania is a grow or die thing. If growth is below zero, it’s game over, crash, tank, crater.

  2. ‘If you or your principal investors aren’t tight with politicians or regulators, and you can’t induce them to look the other way or rewrite the law so as to enable your company (and, in a neat two-for, kneecap your competitors), then entitled and destructive behavior is less likely to be tolerated…‘But that has not been the model,’ says Ronen. ‘The model has been to flout and break laws, get people hooked to the service, and force city government to bend to the will of a scofflaw company by becoming a powerful force in lobbying and financing of candidates and campaigns and politicians in Sacramento.’

    I’ve been saying this for years. Plus it’ll all break down once the fat envelopes dry up.

    1. ‘and, in a neat two-for, kneecap your competitors’

      Isn’t this how Uber works? Why can’t just anybody run a taxi? Oh right, they don’t have lawyers with brief cases full of campaign donations!

      1. “Isn’t this how Uber works?“

        Exactly what came to mind when I read this. A business model that uses someone else’s property and makes revenue (Likely negative). The overhead for the “renter” will make this “idea” of commercial Airbnb even less financially attractive with clean up, utilities, etc.

  3. $10 a day to let strangers use my house? And I ‘get’ to host them! I’ve heard some bad ideas from the tech world, but this one has to top them all!!

      1. ‘Fueled by a $4.7M Seed round from LightSpeed Venture Partners and Mucker Capital, the startup seemed well poised to capitalize on the lack of affordable housing. It announced its expansion to five cities – San Francisco, Silicon Valley, New York, Seattle, and Los Angeles in a feature that appeared in June 2018. Less than a year later, the startup appears to be imploding.’

        “When most startups go down the worst thing that happens is employees lose their jobs. In this instance people are potentially losing their living situations and in expensive cities like these it’s not easy to just up and move to another place, not to mention all the fees you can be charged for not meeting rent,” said Rhiannon Sullivan, a HomeShare user based out of LA. “Honestly, if they had given 30 days’ notice and not held onto our deposits most of us would have been fine. I’m just really upset that they threw this all on us right before rent was due,” she said.’

        ‘Other customers shared similar accounts – John OShea, a tenant based out of Milpitas said that HomeShare failed on its contractual obligation to find a housemate replacement, leaving him to pay an additional $825 more than was necessary. According to the service agreement, HomeShare has 30 days to find a housemate if one moves out. They deducted future service fees from him and his roommate as well’

        ‘According to the post, HomeShare currently has 1,000 active residents. However, the post doesn’t explain why they are only serving two locations at present (San Francisco, and Silicon Valley), down from five previously, and why their Instagram account appears deleted.’

        http://www.ktvu.com/business/shared-housing-startup-abruptly-changes-terms-of-service-leaves-tenants-outraged-and-shortchanged

          1. The trickle-down economics of trash picking
            gulfnews.com-10 minutes ago
            San Francisco: Three blocks from Mark Zuckerberg’s $10 million Tudor home in … now lives in government-subsidised housing, Orta is a full-time trash picker,

    2. @ Sean, you RentDonkey. How’s life treating you? I guess you want to live in Venezuela? Where the government can tell you where to sleep, what to eat, when to sh*T? These tech companies has the perfect business model. They put complete strangers into an owner asset and wealth generating home and just take a small cut. Start-up may lose money in the beginning but they tend to make up for it with volume. What’s not to love? The investors become rich, the homeowner become rich, the employees become rich, everyone wins!

      So lets say a few young kids get molested by the strangers? Things happened. Who cares. They won’t remember sh*T anyway. I’ll be making a $$$ when they IPOs like HomeShare will soon.

        1. Wouldn’t that be considered unearned income? Or are they evading tax laws in additional to zoning laws too?

        2. Sean, again, you are looking at this through your closed-minded, Socialist lens. You need to put on your “Winners Take All” Capitalist lens. Lets say you put the 6 workers max. That’s $60 a day and $1,200 a month. You just generating $1,200 a month for the economy! This money flows from bottom to the top, benefiting everyone it touches.

  5. ‘There are about 290 active short-term rentals from Airbnb and HomeAway in Chapel Hill, 185 of which, or about 63 percent, consist of the entire home. Their growing presence is making residents, public officials and developers wonder whether regulation should be on the horizon.’

    ‘Laurie Paolicelli, the executive director of the Orange County Visitors Bureau, said the discussion about short-term rentals and the impacts it has on affordable housing is starting to creep into Orange County. She said the concerns are more with entire homes rather than attached bedrooms.’

    “Nationwide, what we find is that they include a number of issues for communities and Chapel Hill is no exception — increased home prices, reduction in workforce housing, and affordable housing stock and also a change in neighborhood’s complexion,” Paolicelli said. “For example, people by-in-large rather have neighbors rather than visitors turning over because they don’t really know the rules about the neighborhood in terms of speeding and parties and what not.”

    https://www.dailytarheel.com/article/2019/04/airbnb-town-effect-0408

  6. “Their business models were, additionally, strictly illegal under city law.”

    1) Zoning laws (had) a purpose. Residential is exactly that. Not hotel. Not business. Now routinely flouted due to graft and corruption of local politicians. Many negatives to homeowners, but money to be made one way or another. If zoning actually enforced, then none of this nonsense would ever be considered.

  7. Would you want some stranger(s) on your home WiFi network? Using your bathrooms? Refrigerator? What about background checks? Child molester in your house while wife at home with the kids? Are you nuts? Asinine.

    1. Unless the homeowner is the child predator and an Identity thief wanting you to use his Wi-Fi. Then the renter is the one who have to worry about. Imagine hidden cameras all over your room/bathroom? Risk is on both sides.

    1. Thanks for sharing this. John Oliver does a pretty good job of comedy/opinion. I still think his pieces of multi-level marketing are the best I’ve seen.

  9. Just when you think Silicon Valley has run out of new ways to tear the social fabric of this country further apart, they overachieve again.

    1. Yeah, the business models pretty much turn on monetizing things like trust, privacy, and the social fabric. These people couldn’t care less. I’m not sure who’s worse, Silicon Valley or Wall Street.

      The commoditization of residential housing always has been the worst part of the housing bubble, for me. We don’t live in communities of people anymore, but in communities of investments. As such, a return is the priority, not common humanity.

      1. We don’t live in communities of people anymore, but in communities of investments.

        I got my first lesson on that in 1997. The ex and I both grew up on farms in rural communities as the children of blue collar types and assumed when we had a house built in Colorado that we would be intertwined in the lives of our new neighbors for decades. We were really surprised when they all started moving on to other newer subdivisions within a couple of years. Turns out they were cashing out their equity by selling and plowing that into a bigger nicer house in an effort to eventually retire rich on strategic housing purchases. It was a new concept to us rubes.

  10. Business schools focusing on entrepreneurship are fueling these B$ business model companies. I know from experience; I graduated from one 2 years ago. I can’t bring myself to watch the pitch Ben linked to. I’ve had more than my fill of pitch fests where flash is paramount to substance.

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