Given that we've been throwing cash at every conceivable idea for the last ten plus years, yet when speaking of unicorns we still have to refer back to airbnb and uber, seems like we're well past "peak unicorn" and well into the "horse with a mild concussion" era.
It's also disconcerting how much their success seems to hinge on using technology as a lever to break laws or social expectations, as opposed to technology as something that itself empowers humans to be more productive.
Getting a taxi in my college town in 2005 was agony. Make a phone call from a loud bar and shout at some guy who can barely tell what you're saying that you want a taxi and then maybe if you're lucky they show up in an hour and cost 3 times as much as you expected (and that's on a good night!) vs. "press a button, get a ride" (and have a feedback mechanism for horrible drivers or gross cars, etc.).
Uber has issues but honestly it's night and day compared to what taxis were like. And they decrease DUI's.
It's a better experience for sure, and that's why they got the viral start that gave them the opportunity to eat the world, but presenting that as "worth it" seems pretty dubious considering:
- Tons and tons of users buying vehicles they can barely afford to drive for them
- Tons of restaurants already struggling to get by saddled with needing an iPad or two at their counter to intercept online orders, and needing to charge more and anger customers just to break even on the fees
- Huge amounts of sexual assaults because Uber didn't vet drivers
And lest we leave it merely implied: Uber is worth what Uber is worth because it's a taxi company that owns no Taxis and pays no taxi drivers a proper wage. That's why it's a billion dollar unicorn. Same as AirBNB is a hotel chain that owns no hotels, UberEats/Doordash are food delivery services that don't own restaurants, Instacart is a grocery chain that doesn't own grocery stores.
Honestly if you want to really be cynical about it, the true path to finding the next tech unicorn is figuring out how to be a $business that owns none of what a $business normally does, and hires no employees that $business usually does, and then wrap that up in an app, and convince poor people to do the work for you because they have no other options. Boom, unicorn.
The way taxi companies had languished in obsolescence was definitely a problem, but I struggle to consider if Uber was the best way to solve that on any front.
Lots has been written about how way too much contemporary US business is about value extraction not value creation.
Put differently, a common business model in late 20th century and early 21st century US capitalism is to find a transaction that is already happening "at scale" and figure out how to insert your own company into the transaction and extract some percentage of the value.
The primary way of accomplishing this is to create a (new) story to tell about the value you claim you are adding to the transaction ("it's so easy", "we have an app for that", "so much quicker") even though in many cases nobody (or very few people) were asking for whatever you bring to it.
This does not mean that there is no value added. What these companies do not represent are new transactions: no new products, no new macro-scale services ("but you get a car with your phone now!" still boils down to "someone will drive you where you want to go").
> Lots has been written about how way too much contemporary US business is about value extraction not value creation.
I wouldn't even say it's isolated to businesses anymore. This is the same economic forces that's prompting all the crypto nonsense from a few years back, bullshit businesses like drop-shipping, social media influencers, etc. There's just nothing left to build anymore it seems. Every industry is stagnating, year over year there's no crazy new innovations anymore, nothing to get excited about. Just dumber and thinner versions of things we already had.
The tech industry is currently bending backwards so far it's collective spine will snap any second now trying to convince people LLM's are the next big huge thing, and there's just nothing there. 150 billion dollars for fancy autocomplete.
>The tech industry is currently bending backwards so far it's collective spine will snap any second now trying to convince people LLM's are the next big huge thing, and there's just nothing there. 150 billion dollars for fancy autocomplete.
I wouldn't say nothing there, and that something is something. Translation, rephrasing and a lot of management tasks like summarizing what happened are way easier and better than any previous models I've seen.
Creating images and logos is usually very constrained by what you can describe without describing what's not there, it's impressive nonetheless.
Autopilot code autocomplete is pretty good, but not replaces all engineers good, rather increased efficiency good.
The problem is they all lie about it being the thing that will replace all knowledge work. CEOs are buying it up and salivating.
It could replace a lot of middle management at my company. But those are the people that are staying.
What's worse is that "there's just nothing left to build anymore". There's tons of work that needs to be done in the real economy (infrastructure repair and upgrades, housing, especially infill), but can't be, because the asset economy is much more profitable. Everything seems useless because it's not being built to use, it's being built to inflate equity "mystery box" values.
Good point, but I am not sure it's all quite so black and white.
Maybe you are right for the US, but here in Germany at least, and I could be wildly wrong about numbers:
- Uber: not a game changer, popular with a certain demographic, but taxis were mostly fine anyway
- airbnb: ok, huge
- doordash/etc: maybe executing a bit better, but delivery has existed just fine
- instacart et al: now we get to the real thing. groceries delivery had only been done by a couple of chains, and sometimes only for a couple years, then abandoned again already. so you never really got whatever you wanted, from where ver you wanted. Paired with our sometimes very limited shop opening times (6-20 at most, in recent years more, but just in some states) this was different, e.g worth it even if it is not your weekly haul and/or alcohol for a party.
Airbnb has destroyed tons of communities and worsened the already terrible housing crisis.
Doordash/Instacart/Uber Eats/etc are just market solutions to the problem of everyone being worked too fucking hard and not having the time to exist as people anymore. And while in principle the idea of "hiring someone who has nothing to do and having them do your grocery trip" is perfectly fine, even innovative, in practice what it amounts to is someone making less than minimum wage while putting mileage on their vehicle and burning fuel while a startup in the bay area collects the lions share of the fees from the customer. My gripe isn't with the business itself, the concept is fine. My gripe is that Instacart takes the money that should be going far more to the person actually doing the work. They should of course collect some: what they are doing is not devoid of value, for certain: but they should collect significantly less.
Incidentally that's the same problem I have with Uber. Matching people who want to work with people who have tasks they need to do is not inherently evil. What's evil is doing that, paying the people working peanuts, and charging out the ass for the service anyway so you can pocket more profits for being a middle man.
Honest question from a non-economist: where is the distinction drawn between "value extraction" and "rent seeking"?
Even the canonical example of lobbyists can make some ambiguously defensible position that they add some value; e.g., "We make sure constituents have a conduit to their representative"
"Rent seeking" requires that you own ("control") a thing people want/need and will/can pay for.
"Value extraction" almost implies non-ownership, and represents more of a contractual arrangement whereby you provide X to a set of transactions that would happen without you, and in return you receive Y. Obviously if Y is universally of less or equal value to X, nobody is harmed. But if Y is of significantly more value to a given demographic or particular circumstances, then it is not clear that this is a win for society overall.
Where they overlap is if you have managed to create sufficiently high barriers to entry in the field of "providing X". This is tantamount to ownership of a resource that people want, and you're the only provider (or one of just a few).
Any service that took money for rides would turn in to this. You know lyft? Before it was lyft, it was zimride. And zimride was just a way for college students to share rides places, a bit more organised than the Craigslist ride share board (which I used often)
Then zimride said “you can use that gps receiver you’ve got in your pocket to find people who need a ride near you and we’ll suggest how much gas money to split”. But pretty quickly people started just taking passengers even when not on their own trips, and lyft morphed in to…. Basically Uber.
Before Uber was available in Orange County, circa 2010-2011, I used an iPhone app to call a yellow cab to pick me up without having speaking to a dispatcher. I was able to give feedback about the driver too. Uber-style apps to hail cabs did exist, maybe they just weren't rolled out to all markets.
Before the launch of UberX, the Uber app positioned itself as a convenient way to call a black car/limo and, for drivers, to get some extra business between their "regular" calls. It was a semi-luxury though it only cost a bit more than a yellow cab (I only ever used Uber pre-UberX to get to/from the airport).
Really, other than surge pricing, I don't think Uber innovated very much on the tech side. Their success in disrupting cabs was rather down to flooding the market with supply, oftentimes in ways that flouted the law.
Uber did this. Whatever else you think of them, they massively uplifted an entire industry's customer experience, and pretty much globally. That's an insane achievement.
In this particular case I'm pretty sure the taxi app was completely independent. Nobody actually expected Uber around here (and in fact I've yet to see any), and everyone and their mother added app support for their services. They already had a history of adding new ways of getting a taxi, as and when technology became available. And, and taxis in general are connected to a taxi service central it's easier to come up with such a thing.
That's one problem. I typically need a taxi when I'm in a remote city a long way form home. Uber gives me a common app that works from Sydney to San Francisco. I'm not going to land in Chicago and work out which of the myriad of apps I need to get.
Now if it was instead a website, sure, much easier. No need to create accounts etc, just visit "chicagotaxi.com", perhaps shown on a sign at the airport/station/etc, then book and pay with applepay/googlepay.
But installing some application, signing up, having my data stolen, all to be told "no taxis available", is the reality of a local app.
> I'm not going to land in Chicago and work out which of the myriad of apps I need to get.
But big airports have a taxi line. You stand in it, and you get a taxi.
I flew into Washington DC last week, and it was faster to stand in the taxi line than to call an Uber and wait for it to arrive. On the other hand, it was faster to get an Uber back to the airport when I left than it was to catch a taxi.
And of course, certain cities have decent transit systems. Both Chicago and DC (and hundred of other cities) have transit fare cards you can put in the wallet app on your phone. Some, like DC don't even need an account or download. Just add money with the payment card already stored in your phone and go. The experience is better than Uber - assuming the transit system is any good.
I arrived at Miami station last week and got an uber, not one of the waiting taxis, because I wanted
1) Guarantee of payment by card
2) Guarantee of receipt
3) Guarantee of going to the right destination
The week before I landed at Dulles and got an Uber. The queue for the taxis was very long, but the wait for Uber was hardly quick either. Last time I took a taxi in DC they refused to take card. That was pre-covid, but why would I take the chance again.
So then it depends on taxi services. I'm not in the US, and all the three points you listed are more than guaranteed by actual taxi companies around here. In addition to that, I also will be made aware of the price in advance.
How is the situation with Uber and insurance these days? I remember from years back that Uber drivers didn't have the insurance that taxi drivers need (though that may vary by country). As one who has actually experienced a car crash involving a taxi (I was in the taxi, but fortunately on the left side in the back seat when another car crashed into its right side), I have a keen interest in insurance..
Sure, but there's a difference between "that kind of success" and "any success". To illustrate, imagine an alternate timeline with a company called "Rebu", which provides all the same phone-apps and servers and whatnot for thousands of taxi-services across the world to adopt, replacing their shitty old "computerized dispatch" systems.
Do you believe Rebu could that have managed to draw the same level of venture-capitalist money and unicorn-ness and hype, even sharing the same core technologies, code, and product features?
I don't think it would, and I'm asserting that comes from business-plans, labor relations, legal challenges, government lobbying, investor marketing, etc., which in several cases have been, er, ethically-problematic.
I think you're missing a key bit: taxi companies weren't interested in this sort of thing. In most municipalities, taxi service was a protected, government-granted monopoly. The reason taxi service was always so bad was because there was no competition, and no incentive to improve.
So why would they bother to adopt "Rebu"? It's nothing but downsides: their taxi drivers have to work harder, have to be more polite and drive more safely, have to have cleaner cars, and have to be more accountable in general. Not to mention of course Rebu is going to take a cut of all rides booked on their platform.
There was no way to make regular taxi service better without structural and legal reform that the incumbents did not want. The only way to fix it was to go outside the system and do something sketchy. And it worked! For all their issues and controversies, the ride-hailing app experience is amazing, especially when compared to old-school taxi service. Some legacy taxi services have stepped up and improved a bunch since then, and others have just faded into obscurity.
I think we're doing a lot of work to get into the mind of cab companies, but along those lines: they weren't interested because the market isn't really that large. Uber is barely profitable now after raising rates tremendously and aggressively fighting any kinds of workers rights initiative. That means two things. First, people don't think a typical ride is worth very much, and second, people don't really have that many places to go. The destination list is 90% work, the airport, and nightlife. These are not the underpinnings of a multibillion dollar business... unless you invent self-driving cars or achieve a good old fashioned monopoly (a lot of the reason many cab companies went out of business as you say is that Uber failed to invent self-driving cars).
But overall this was pretty bad investment for humanity. Let's just stipulate it's a lot easier to get a ride at a reasonable price and that's a good thing (not a given considering increased traffic and greenhouse gas emissions, plus decreased pressure for cities to move away from car-dependency). Was it worth multiple billions of dollars and software engineering hours? Like, assuredly not. It's a big "LOL" drawn in lipstick on a portrait of the efficient market hypothesis. It turns out the private sector is also great at just setting huge piles of cash on fire.
The problem is cost. For most people owning and driving their own car is much cheaper than hiring someone else to drive them. Many people would like someone else to take care of the car and driving, but drivers need a reasonable income - if a driver works for your 2 hours per day that implies of your 8 hour day at work 2 hours are spent working to pay for that driver (of course drivers typically make less than a "white collar professional" but still a significant portion of your income goes to your driver). Which is why taxis always hung out at airports - often they would wait in line for an hour to pick someone else, with smaller amounts hanging around around hotels and bars - the few places where people who owned a car had reason not to use it.
Self driving is the only way uber or a taxi can be a large business. The cost of labor is just too high and so most people are forced to learn to drive.
Even with the above I question if self driving is really worth it. If you own a car and have it parked nearby it is ready to go when you want to leave, and better yet you can store your stuff in it. Combine that with rush hour - most people are traveling at about the same time every day, and some people wanting nicer cars than others and it is hard to see how it can work out. (unless you live in density such that parking is hard - but then transit must be your answer not individual cars since self driving cannot solve traffic)
The other problem with the business model is with self-driving cars, unless you have exclusive self-drive technology, the barrier to entry to other carpooling options is quite low.
In fact you could easily see car manufacturers offering such services - something like Zipcar but more convenient as the cars can self redistribute.
I find it hard to believe Uber will ever break even ( not on the day to day costs - recouping all that upfront investment ).
Having said that, the likes of Uber have changed the world - so the money wasn't entirely wasted.
I don't think car manufactures will offer that service - it gets too deep into weird monopoly laws and the like that they want to avoid. Plus it is a distraction from their business. They will instead sell to others who offer that service.
Generally shared cars only make sense when someone drives very little anyway. Cars are expensive and so shared cars are either too expensive to be used often, or very hard to get at. Renting a car for a weekend is about half the cost of a monthly payment on the same car, but if you buy the car you have it the rest of the month (and if you buy a car you have used options or keeping the car after it is paid for to bring the total cost down - you will have to pay maintenance costs but those tend to be much less).
Every business in a competitive market is "barely profitable", that's how capitalism works. If a company is raking in massive profits that's a sign that the market is distorted somehow -- a monopoly, collusion, regulation, etc..
Maybe, but the point here isn't that Uber underperforms, it's that their innovations didn't sufficiently expand the market. I'm arguing cab companies saw that coming, whereas Uber/SV didn't and spent billions of dollars finding out.
It's an indictment of the VC model where essentially you build a company that hogs all the value for investors. If you think this is a good model, i.e. that investors make better decisions than governments, labor, and the market, then I think you have to reckon with the utter wastefulness that is Uber. A better thing here would have been to just build a ride hailing app for existing cab companies.
Yes, but P implies Q does not mean that Q implies P. IOW, a competitive market implies a lack of profits, but a lack of profits does not imply a competitive market.
The UK has a similar distinction. "Hackney carriages" (the classic "black cab") are allowed to pick-up passengers on the street, while private hire vehicles (often called "minicabs") can only be used by pre-booking. The former are more regulated than the latter. Ubers are minicabs.
(Black cabs don't have to be black, but usually are. As to why they're called "Hackney carriages" - the last person to know the reason probably died in 1863.)
I think the difference between the hypothetical Rebu and Uber is one wants to fix the system, and one wants to be the system. The Taxis had to be disrupted, but Uber doesn't flinch at being just as bad wherever they can get away with it
I'm confused to the argument you're making as some of those are clearly ethically-problematic for Uber while legal challenges, government lobbying seems core to the business.
The taxi market, in the US at least, was a textbook case of regulatory capture to stifle competition. Google "taxi medallion prices nyc" for an example. Uber was clearly the 'good guy' in flouting those laws and later getting them repealed. The cartels that controlled the medallions had no interest in improving the technology until they had competition.
Because it also had massively better UX than any previous taxi journey. Order from phone; price up front; pay in app; know the licence, make and model of the car coming to get you; see where the car is on the way; travel in any city (except, say, Oxford, UK, unfortunately). All new features for taxi use.
The takeaway here is that rather than invent some high tech wacky thing, just target some existing cartels/government monopolies. Hotels (AirBnB), telecommunications (Facebook versus AT&T Bell), taxi services (uber/lyft), broadcast television (netflix), radio (spotify), and spaceflight/rocketry (SpaceX) come to mind as successes.
What else is there?
- Boeing - Just need to invent a better commercial passenger airplane
- Lockheed - The day of 150 million dollar manned fighter jets is coming to an end.
- Electricity distribution - PG&E or Southern California Edison. Only way to crack this is with decentralized power
distribution and batteries
- Waste Management - Trash collection, recycling, and processing
- DeBeers Diamonds - Diamonds can basically be synthesized in the lab at will now.
You're right, but you're treating that as a net-negative. The reality is that the government regulations structured taxi services in most cities in the world into cartels that operated in a way that was to the detriment of their customers. Uber broke the taxi cartel, and yes, it broke the law to do it, but it wouldn't have been possible to do this way if they'd tried to work with the existing taxi companies, because their anti-customer cancer would have infected Uber while it was young and before it could even scale. Part of their value proposition is their scale, itself.
Services like Uber and AirBnB have also introduced a concept through technology that was previously almost unheard of in the private sector: a nationwide blacklist.
Bob Smith annoyed enough Uber drivers in Milwaukee that now he can't get a ride in Poughkeepsie. Maybe that's valid, maybe it's not. But it is pretty new, and I doubt it was in the slide deck when Uber hit up the VCs.
The social aspect of these sorts of things can't help but get entangled with the politics of social mores. Maybe Bob was giving the Uber drivers wet willies. A lot of people would think he caught that ban fairly. Maybe Bob was too politically incorrect for the Uber drivers. Not quite so sure he deserves to be sentenced to hoof it until the Sun burns out. How do we know the bans are of the fair former and not the latter? We don't. It's a private company, they can be as opaque about this as they want.
Good, bad, who knows, but it certainly makes for a completely different landscape.
I agree that this sort of thing is a problem, but it's not a fundamental problem with the existence of these services. It's just a problem to be solved, perhaps through legislation on how suspensions and bans are allowed to work, and how people ought to be able to appeal them.
The legacy taxi services had this problem too, though, as you note, not on a global level. Pre-Uber, there was one taxi service that stopped taking my calls. I have no idea why. I had no way to appeal this, or to even get in touch with them to find out what was going on.
In the meantime, Bob still probably has public transit or local old-school taxi services to fall back on (which somehow still exist). Many areas even have local ride-hailing apps. Worst-case, Bob will have to rent a car when visiting other cities.
>I agree that this sort of thing is a problem, but it's not a fundamental problem with the existence of these services.
Well, it kinda is a fundamental problem, with regard to the original article's premise that scale is a problem. These services can't operate on VC's terms without scaling up to a national or global level. And this, by its nature, means your Uber problem in California follows you to Georgia, and possibly to Uzbekistan.
What if Uber shares its ban list with Toasttab? Or if Uber buys Toasttab?
Laws may be able to address this, but laws always lag. Sometimes by a lot.
Uber's goal from the start has always been to replace human taxis altogether with robotaxis. This is just phase 1 (put most taxi companies out of business).
Your view comes up every time. Basically you are claiming "Taxis sucked, so it was ok that Uber broke a lot of laws and social conventions to make the situation better".
Ultimately it will be better, because a temporary wrong is nowhere near as big as the ongoing, forever-accumulating better experience people have now. The only exception to that is that they should've background-checked drivers first.
It’s more about regulations rather than development. It’s forbidden here, so taxi drivers can still make a good living rather than subsidizing a billion dollar company
Er no, they totally transformed things through technology as well. Their product was fantastic. Hail a cab in the 2000s in the UK and tell me Uber had no improvement for its customers.
Right but how much of this improvement came from the invention and popularity of smartphones and how much of the innovation came from a company called Uber.
But those car companies are just riding on the coattails of Exxon, Chevron and the like with their improvements in oil discovery and hydraulic fracking.
Do you lament e.g. Uber knowingly breaking laws, and then in the knowledge that they are knowingly breaking laws and under scrutiny for doing so, also actively building functionality into their systems that helps them criminally evade scrutiny?
No, I don't care about that at all. Why do you care?
Someone, generations ago, made a law saying people in your town could only solicit car rides if they paid a special tax, and now you're out here vigorously defending that dead model.
State-enforced monopolies are often legalized corruption. I care more about that than some corporation using their resources to break that corruption.
> Someone, generations ago, made a law saying people in your town could only solicit car rides if they paid a special tax, and now you're out here vigorously defending that dead model.
Congratulations on a text book case of Chesterton's Fence [0]. You've mischaracterized the purpose and nature of the law.
1. we have cars, we have people willing to drive them around to take people places
2. we want some regulation of this new business/service, to make things safer for the riders
3. we want some regulation of this new business/service because otherwise competition will force the price so low that nobody can make a living offering to do this (and we consider the service valuable).
So, we introduce a scheme which says you have pay for a license in order to provide this service. This creates driver identity and "responsibility" which we want for riders. We limit the number of licenses so that we do not have too many drivers chasing too few riders, and thus offering a more reliable income to the drivers, ensuring that the service remains available.
[ time passes ]
Uber introduces a scheme in which there is almost no floor to what drivers might be paid, but manages to tell a story that convinces enough people that they could make a living or at least a significant amount of extra cash by driving without the required license. Uber also assures riders that even though there is no official license, their technology can provide the driver identity/responsibility that it offered.
Result: better ride hailing for riders, money for Uber, and a steady, constant turnover of drivers "just giving it a try because I heard you can do really well ..."
As usual, a mixture of pros and cons, which vary depending on which perspective you are taking and your moral/political philosophy.
>Congratulations on a text book case of Chesterton's Fence [0]. You've mischaracterized the purpose and nature of the law.
You have created a convoluted ex post facto defense of taxi laws which sound plausible but are likely wrong.
"Chesterton's fence" doesn't say that "the most socially positive explanation is correct".
The simpler explanation is one of "concentrated benefits, diffused costs". A group of taxi owners helped implement a state-enforced monopoly at the expense of the rest of society. Technology enabled a new group (Uber) to concentrate benefits further at the expense of the relatively diffused monopoly-holders. Society benefited in some ways (easier rides) while likely bearing costs in other ways (drivers subsidizing Uber).
> You have created a convoluted ex post facto defense
Why is it convoluted? Watch the process that has happened with every other technological development in the last (say) 40 years? How is what I've described any different?
> A group of taxi owners helped implement a state-enforced monopoly at the expense of the rest of society.
You assume that the downsides of the "monopoly" (I'll ignore the twisting of the conventional meaning of words there) are larger than the upsides, and yet you seem to similarly assume that the downsides of Uber are smaller than the upsides.
Society got a new line of work that made a reasonable living, control over the drivers in the interest of safety and accountability. Those are not exactly like the discovery of fire or the dawn of agriculture, but they are not of zero worth.
I also note how your description of "A group of taxi owners helped implement" has an implicit negative tone, something alone the lines of regulatory capture. Yet we regularly hear calls for regulations to be created with the participation of those affected by it, so that legislatures and civil servants don't make stupid mistakes/decisions.
Look, I'm not really interesting in defending the medallion systems. Taxi service in many places sucked under it and conditions for many drivers weren't exactly what society might have been aiming for.
But tearing it down in favor of another mixed bag of pros & cons needs to be done with a subtle weighing for the relative pros & cons, not the reckless and giddy greed of a company like Uber.
Isn’t the entire point of Chesterton’s fence to consider things ex post facto? How would you explain places that have regulations for taxis but not artificial scarcity? I don’t think the collusion argument is simpler at all. That is not to say it doesn’t explain the situation in certain places of course.
Do you ever visit or live in a place with unofficial cabs preying on people at an airport? You're acting as if laws were only made by corruption and not because people were screwed over.
I think Uber is probably a net good thing but I also think Uber should be accountable for the laws they broke. Also, Uber, Lyft, Airbnb also did exactly what was expected and increased prices to a ridiculous degree once they became the default standard and went public.
I remember official cabs that were also predatory (especially to gullible tourists) and abusive (especially to minorities). Uber's star rating system is not great, but it's vastly better than the blatant customer-ripping-off assholism of the pre-Uber taxi era.
In this particular example with Uber, I see "powerful actors" many decades ago breaking our social contract by using the force of the government to implement a monopoly for their own profit and everyone else's expense. Legal, yes, in the strictest sense of the word, but certainly against what I value about my particular republic (USA).
So Uber here is more "the enemy of my enemy is my friend" than a company I actually admire.
So clearly you aren't a fan of Gandhi. He also very deliberately broke the law. And not a fan of Nelson Mandela either I guess.
Not all laws are good. Using the taxi licencing system as a way of extracting tax income is one example of a "not good" law that somehow wormed it way into many societies.
It might never have changed unless an Uber had some along. The taxi licencing scheme has the unfortunate characteristics of being inefficient but not egregiously so, and had put golden handcuffs on a group of people making a valued contribution to society. Those handcuffs were the taxi licences, which became the taxi drivers retirement fund. The taxi drivers always fought any threat to the value of those licences long and hard. Those two characteristics ensured a politician would spend have to spend a immense amount political capital to fix something that had only a modest benefit. It looked like we were doomed to suffer from this tax parasite forever.
But then a seismic shift in technologies came along, and it was not so easy enforce the laws that protected the parasite. The way I remember it the taxi drivers screamed blue murder as their net worth went rapidly to 0, but the reaction from law enforcement was ... muted. I'm sure with a concerted effort the politicians could have made life so difficult for Uber the parasite could have survived. The taxi drivers certainly thought so. But it looked to me like my republics elected officials chose not to spend political capital on doing that. It was almost like they were glad to have an excuse to rid themselves of a parasite.
Now the carnage of the taxi drivers net worth going to zero is over. That aside, most things have got better. With the monopoly broken there are more taxi companies than there were before, taxi availability has become better since you don't need an expensive licence to put one on the road, and prices have dropped.
Sometimes the ends doesn't justify the means, sometimes it does. This looks like the latter to me.
> So clearly you aren't a fan of Gandhi. He also very deliberately broke the law.
I have to say this is one of the silliest takes I have ever seen on HN.
You only need to look at the way Gandhi broke the law, the methodology of his disobedience, to see that you cannot possibly make a comparison with Uber that shows them in a good light. It's absurd to draw this comparison.
Sure, that's bad. But that has nothing to do with the fact of their existence.
Laws aren't universally good. Some laws are bought and paid for by special interests. Some regulations are the result of regulatory capture. I am totally fine with people or companies skirting our outright breaking those laws in order to make things better for people.
But yes, Uber also did some bad things that I don't agree with. I still think Uber has been a new positive for my life, and I'm happy they exist.
That just sounds like "crime" as well. If there's a profit motive, it's not civil disobedience. I think the way Uber was run internally is more than enough evidence that the initially dubious claim of some sort of crusade to right wrongs in society can be completely dismissed.
I'm not sure if this counts as being "empowered to be more productive", but both Airbnb and Uber are (to me, at least) still miles ahead of what were the only options pre-Airbnb and pre-Uber.
The hotel experience of course was (and is) not universally bad, but I still prefer an Airbnb in most cases, for most trips I take. And when it comes to taxis... no thanks. Unless I have foreknowledge that taxis are significantly cheaper than Uber/Lyft in a place I'm visiting, I will take that Uber/Lyft every single time.
Airbnb is certainly more fraught, given the problems for communities that rampant short-term rentals can cause. And I won't claim that Uber/Lyft is fair to their drivers. But I don't really care if they had to break laws to get where they are. Sometimes laws are wrong. Sometimes laws are the result of corruption and lobbying that isn't in the interests of the actual constituents. "Social expectations" is a bit of a weird thing to bring up, since it's so amorphous and hard to pin down. I don't think I ever had any "social expectation" that people can't rent out their house or apartment for a few days or a week. I don't think I ever had any "social expectation" that the only way to hire a car was to call a number that often doesn't pick up, and then wait 30-60 minutes for a car that often doesn't ever arrive.
> And I won't claim that Uber/Lyft is fair to their drivers. But I don't really care if they had to break laws to get where they are.
"Technology and throw-caution-to-the-wind made life better for me as a consumer, and I openly don't care (much) about the negative impacts on communities and other individuals".
> Sometimes laws are wrong. Sometimes laws are the result of corruption and lobbying that isn't in the interests of the actual constituents.
Certainly. That's why we have a process to change them, rather than simply ignore them.
Zepto is the largest grocery delivery service in India and was YC Winter 2021, and currently is valued at $5B.
Realistically people were making these kinds of points back in 2015, and now a large percentage of the lists of unicorns were from somewhere around 2015. It just takes time for most of these companies to become well-known unicorns. The last five years is always the worst five years, until you wait another five years and in hindsight consider it a golden era.
Edit: although I do think that the couple years of high interest rates will slow the growth of startups from this era, since it has a meaningful impact on how much cash VCs can spend. The AI boom at the tail end of high interest rates will probably cover a bit of that though; OpenAI is the first runaway success but I'm pretty sure it's not going to be the last.
It’s not that scale ruins everything, it’s the pursuit of scale that ruins everything.
I have thought a lot about antitrust recently and realized that it’s an overlapping problem with the VC unicorn problem. People get so hung up with being bigger/biggest, faster/fastest, that they minimize or ignore pathological side effects.
What if we have a progressive tax structure on business based on scale? Partly on size, partly on market power?
For example, what if corporate income tax were tied to the logarithm of the number of employees+contractors? What if the corporate income tax increased with the market share in markets served?
These kind of ideas have very low impact at small scales, but after a certain scale they start to have such a huge effect on bottom line that they disincentive growth for its own sake.
And they’re self-regulating and largely objective, unlike our current antitrust laws in the US.
A single human is a non-fungible entity, but a corporation is a wibbly-wobbly entity whose boundaries can shift at will. Any progressive tax scheme on a corporation will be immediately met with 100,000 smart accountants figuring out how to optimize against it. Expect lots of crafty maneuvering to turn one giant corporation into a thousand tiny corporations, yet somehow all under the same umbrella, all anti-competitive, and all benefitting the same original owners.
That doesn't mean we shouldn't try, but these are very difficult issues to address.
> what if corporate income tax were tied to the logarithm of the number of employees+contractors? What if the corporate income tax increased with the market share in markets served?
Is there a reason for choosing those rather than the simpler alternative of the corporate income tax rate increasing progressively with revenue (as it does for individuals)?
I dunno. I have a natural affinity for continuous vs discrete functions. But I also think thresholds cause bad behavior when you are near a threshold; you try to game the system by exceeding the threshold while trying to appear to be below it.
Corporate accountants are sophisticated enough to deal with formulae, and small businesses would be unaffected as the function changes very slowly at small numbers so even an error would likely not materially affect your return.
Calculation of market share would be more problematic.
And of course if you don’t like logarithms then choose your favorite exponential function.
A funny alternative: If a company is deemed large (and stale) enough the government prints money against and purchases it. If you buy a 100 bl company you can write the 100 bl IOU no problem. Innovative departments should be split off into separate companies that start out with a good size government contract.
Government can then immediately start "mis"-managing the company to make it less profitable (while theoretical profit stays the same)
You would get for example a government google search and a government adsense department.
Large corporations would become a constellation of tiny independent companies who agree to provide goods/services in exclusive agreements with the “controlling” company.
Absolutely nothing would change except for an increase in paperwork and a few more lawyers.
That sounds a bit like "VAT can't be too bad because we can just not apply it", which I don't find convincing.
I agree that it's an easy tax to collect, and I think that's very important.
I fundamentally disagree with the grandparent that holds that we should tax flow rather than holding. That's a handbrake on activity. But I suspect we won't reach agreement as it's a question of personal values. If you think that billionaires are great and we need more of them, then I can see how you'd be in favour of vat.
At the companies that would be affected, they would simply divest. Shareholders would not tolerate the destruction of value so new companies would be created, spinning off parts of the original company (products and employees) into new companies.
In fact employment might increase as these new companies would need administrative functions that were previously shared in the larger original company (HR, accounting, etc)
Comical to suggest that AirBnB "ruined communities" or "destroyed the dream of home ownership" as if decades of federal, state, and local government policy had not already guaranteed those outcomes.
Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people: those who would already be buying at the limits of their budgets to stay where they were brought up.
This happened even in areas where holiday home ownership and rental was common as a business.
The failure of government to grapple with the negative effects of Airbnb is a separate thing. Airbnb are, in fact, in control of their own morality.
As a home owner that was only able to afford to buy a house because we were able to rent out the spare rooms on AirBnb I find fault in your logic.
I think you'll find that zoning/planning permission is the real bad guy here. That and a failure to understand Adam Smith and implement the ideas of Henry George.
> because we were able to rent out the spare rooms on AirBnb
Unless you were the very first person in the entire area to think to do so, then the existence of that very market for you to rent spare rooms on is actually driving up the prices of properties so you have to do so.
It's also driving up the prices of long term rental, because landlords make more money in the short-term rental market. The prices of long-term rental also affect the floor price of permanent ownership.
I have friends and family. From time to time I would like to host them when they visit so we can drink alcohol and stay up late.
Consequently it is always likely that one might want at least one more room than is needed by the family. It additionally provides buffer overflow should the pitter-patter of tiny drains on one's resources appear.
In such circumstances renting out a spare room on a longish licence should necessarily reduce rents since now there is an option which is likely to be cheaper. Renting out a spare room for other people visiting ones city should similarly have had a depressive impact on the price of hotels or an improvement in their offering.
Given the inconvenience and reduced amenity one gains from living in a house under multiple occupation there is further no specific reason why it should be the case that this does not more than offset the cash remuneration meaning there is no in principle reason why the capital cost of such a property should increase.
Yours is not a common case. That was the original dream of AirBNB and the appeal of staying with a family in some far away place made it cool.
The vast majority of AirBNBs are the entire house or some separate guest cottage. Many are owned and managed by larger companies. Or by people who own multiple houses.
The individual home owner renting out a room so they can cover their mortgage has become more of an outlier.
I agree with your statements but believe the solution to be the abolition, or substantial reduction, of planning controls and the introduction of a Georgist Land Tax.
Airbnb demonstrates that there was clearly substantial demand for "house style" hotel rooms but hotels chose not to provide them. In most hotels where a room is $400 a suite with a space to work, watch tv and cook, might be $10,000. The hotel market optimised for the business man travelling alone to conferences and paid a price for it. Even my favourite hotel on earth does not provide an "ordinary menu" for the nights where you just want to curl up with your loved one and watch a film - it's Michelin star dining or bust.
In most hotels the only amenity that a hotel offers that is "better" than the home experience is a swimming pool and daily housekeeping.
Who, but the richest amongst us, has their bed linen changed _every day_?
If hotels had been built as apartments with no zoning restrictions arbitrarily placed upon them there would have been an option for the hotels to adapt by offering their rooms up on a long lease.
> As a home owner that was only able to afford to buy a house because we were able to rent out the spare rooms on AirBnb I find fault in your logic.
Then you're a landlord who has purchased more of a scarce resource than they require (a house larger than you need) who has then turned around and rented access to the extra you have to people who can't afford a home of their own, and in so doing have driven the cost of homeowner-ship just slightly higher, which was the reason you couldn't afford it in the first place. Repeat that a few thousand times and that's a huge contributing factor to why housing is in such a dire state here.
You haven't solved anything. You just went from being an exploited person to being an exploiter instead, taking advantage of people you should have solidarity with and inflicting the harm the system was inflicting on you, onto them instead. The system will continue feasting on people who can't manage the same as you did, and you now posses wealth you did not earn.
Homes on the market aren't infinitely customizable. It seems perfectly likely that GP would have been happy to buy a home with exactly the amount of space they needed, but such a home was not available at a price they could pay. (Maybe they settled for a slightly less-nice neighborhood, or a slightly less-nice house, that just happened to provide an extra room or two.)
Even if that wasn't the case, I don't see a problem with buying slightly larger than is necessary, because (for example) perhaps they're planning to have a couple kids in the next few years, but will rent out the extra space until then. Moving is transactionally expensive, and expecting someone to move every few years as their space needs change is unreasonable.
Regardless, you seem a bit overly judgmental about this entire situation, and about someone you don't know at all.
You need to really distinguish between rent seeking landowners, and value add landowners.
Landowners that have made improvements to the land and seek financial compensation for those improvements, in this case in the form of providing a service, is NOT rent seeking behavior.
That is NOT exploitation.
This is even basic economics from an extremely leftist POV, where those that have added labor value, that is improvements to the land, in this case providing a service and perhaps building a unit, managing them, etc. should be compensated for their labor.
> You need to really distinguish between rent seeking landowners, and value add landowners.
No, I don't. Rent-seeking is derided behavior by basically everyone who isn't rent-seeking.
If you buy property, improve it, and sell it, there's your profit for providing that service. No ethical lapse whatsoever, unless you used that godawful gray laminate that every flipper uses. Then I'm mad at you still but that's a different reason.
If you own a thing that people need, and you gate access to it behind a paywall while maintaining ownership, and extract value from those people so they may use it but retain full ownership and control of it, that's rent-seeking and it sucks. You're the economic version of wind drag.
Yes, that includes the 98 year old lady who rents out a room to fill the gaps left by social security to the nice young man who's going to college in the area. Still value extraction. That young man is losing the value of his labor because he has to live somewhere and she has space he can live in. That's unethical.
Sorry, what's your position here - that any renting of a property is an "economic rent" and thus immoral? That makes little sense to me. I am a renter and glad to be so because I'm not confident I want to live in my current home for the 5-10 years it takes for purchasing it to be worthwhile. The landlord is providing me a service, turning a big, illiquid asset into something that can be accessed with only a 1-year time commitment. This is economically productive (allows me to live somewhere I otherwise wouldn't) and is hence not an "economic rent".
The classic example of an economic rent is a feudal lord putting a chain across a river and charging a toll. This is economically unproductive because it's just putting a price on something that was free (and, you have to assume for the example, non-rivalrous). This is why the sibling comment points out that the rent-seekers in the housing market are more like the people seeking to constrain supply via zoning and regulation.
> Rent-seeking is derided behavior by basically everyone who isn't rent-seeking.
Rent-seeking is something specific. If we can't get that right we're not going to get far into the discussion. Not all rents are the same.
Hotels rent rooms. But they are not the same as rent seeking.
If you're not creating new wealth/value add, and instead exploit rents by mere virtue of owning, then it is rent-seeking. If you're adding value, like providing a service or other additions, then no it's not rent seeking. The 98 year old lady? Probably rent seeking. The couple doing AirBnB? Probably not.
Why?
AirBnBs, like hotels, tend to provide a genuine service that adds value. The listings are in a competitive market, where people need to improve the living spaces in order for them to get rented out. This doesn't take into account the various hospitality businesses that have emerged in various rural communities because of AirBnB. It's an entire industry.
That is Hotels/Hospitality businesses are NOT rent seeking just because they rent out rooms or provide services on land they own.
Who is Rent-Seeking?
The people preventing new housing/infrastructure from being built are the ones rent-seeking. They artificially manipulate market conditions by restricting supply, driving up land value, and thereby generate unearned income. Income that isn't from productive improvements on land but from mere ownership of land. That unearned income on land is rent-seeking behavior.
As far as I can remember AirBnB didn't cause the 2008 financial disaster that really sealed the fate of homeownership in America for the next decade for a lot of Americans.
AirBnB has provided an avenue to generate income for small business owners in rural communities. Urban areas are struggling because they aren't building more.
BUILD MORE. How difficult is it to understand that?
> Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people: those who would already be buying at the limits of their budgets to stay where they were brought up.
The thing that's "ruined communities and destroyed the dream of home ownership" is the incapacity of the community, "where they were brought up", to actually change and accommodate increasing demands.
In reality these individuals from these communities are using Left rhetoric to advocate an extremely conservative position. That is for the community to remain as is, in the exact way such people were "brought up", such that no progress, no change, no additional value is added to the communities.
What ends up happening because of this confused policy is that the individuals in these communities both lose out on their hometown, the community ends up changing, and it becomes impossibly expensive for everyone in the community. IE the worst of all options.
Instead. Build more. Build vertically. Build better infrastructure. Provide for local residents an opportunity to "buy-in".
This kind of cloaked conservatism, masquerading itself using leftist rhetoric ends up being confused from a policy POV.
There are rural/tourist-dependent communities that had an adequate supply of housing when the only visitor accomodation was licensed as a hotel/motel/inn/B&B/hostel. They didn't need a lot of extra, but some slack to accomodate tourist season workers, and occasional new arrivals.
Then AirBnB came along and converted not just the slack, but some residential property that would otherwise have been available for long term lease, into much more profitable short term rentals.
Income at licensed residential stays sometimes drops; short term and long term housing options either vanish or are reduced; problems begin to occur that were not present before.
None of this is in any way dependent on the failures caused by zoning, permitting and housing policy.
This story has been repeated at tourist locations across the world.
AirBnB was fundamentally a message to anyone with residential property: you can make more money with it as a short term rental than via any other use. This is why in many locations we've seen new construction of residential property intended solely for short term rentals. Nobody wanted to build that stuff when it was only going to be LTR; AirBnB changed the game.
You and GP are talking past each other a bit, because they're speaking to the general case, whilst you're narrowing it to tourist-dependent areas. I grew up in a tourist region, and it's been ruined (from the point of view of those of us who are from there, and might have wanted to stick around) exactly as you say.
The complicating factor (which they miss) for a tourist region is that if your "product" is (in part) Small Town Charm, or Rural Character, then you can't build, baby, build without destroying the economic underpinning of the entire community. I wish my hometown had allowed for more hotels (like, decades ago - they were horribly regulator-captured for ages), and had the wisdom to restrict STR before it became such a thing.
For anywhere with a non-tourism based economy, however, I think they are correct: increasing supply is the only possible solution.
It only occurs to me upon writing this that areas without any existing tourist infrastructure are becoming tourist-dependent on the basis of STR, which might be the worst of both worlds. Those places need to allow hotels and (actual) B&Bs, before they ruin their communities through STR-tourist dependence.
Thanks for the unnecessary correction, when it's pretty clear that my comment you are replying to includes the words "even in areas where holiday home ownership and rental was common as a business".
I don't know why it did not happen before.
All I know is that the situation in coastal resort towns in Cornwall, Devon, and elsewhere in the UK changed utterly when Airbnb became a thing.
I could guess that barrier to entry was always an issue before then; the relative complexity and process involved in listing a property with e.g. Hoseasons, who were the dominant player in the 80s and 90s, and who inspected properties and had greater requirements.
But either way, Airbnb did unambiguously change things. Ask people who lived in Cornish towns whether they're even able to rent a room or a flat.
I mean, usually if thing popular, make more of thing until everyone can have it? I guess we could go with your solution of deliberately killing demand with bizarre mechanisms so only a few people can enjoy a holiday instead of pointing the blame where it demands: locals fighting tooth and nail to not build more.
Nimbys are basically hukou advocates in disguise. After all, it's the only solution if you don't primarily place the blame on lack of construction.
There are literal physical limits on this in many coastal villages and towns -- for example pick almost anywhere on the south west coast of the UK. Not only is the area on which houses can be built restrictive due to geography (and often geology), the transport infrastructure does not scale. New property building both has not caught up with, and probably cannot catch up with, short term demand.
As it happens, a collapse seems likely, because local sentiment is turning against them so fast and because of general economic weakness; the number of "thriving holiday let" properties that are on the market now suggests that Airbnb's own accelerating rental costs problem is going to cause a bit of a bust.
But that bust will not benefit most of the people in the areas affected where the price of a small house is twenty to thirty times the average salary of would-be-first-time-buyers. Those people are leaving, so there will instead be a ghost town. And the sheer number of residents who are temporary has destroyed the potential for long-term stable infrastructure businesses for residents.
> Nimbys are basically hukou advocates in disguise.
It's nothing to do with nimbyism, is it? Nimbys are property owners. The problem only affects people who do not have back yards. They can no longer afford the houses at the prices at which they will be built and the rates at which they can be.
This is said rather matter-of-factly, but how do you propose doing that in a society with democratic values (ie people get a voice in their governance) and also where 70% of most household wealth is in their property?
What percent of Japanese household net worth is in their primary residence and how much has this been impacted by their largely stagnant stock market for the last 40 years?
I'm skeptical that national zoning is feasible if for no other reason than the diversity of land and land uses.
Are you arguing for affordability? You can't have both affordability and high price (= huge % of net worth).
It's a very bad thing for people to invest in a fundamentally depreciating asset and expect a return, there's literally no other way to get a return then besides inflation.
And sure, returns have been low, but that's because the real interest rate in Japan for the last 30 years has been negative! You can't get a return if the fundamental balance of loanable funds leads to a negative real interest rate, you need stimulus instead, which they've been trying for over thirty years! And shocker, now that we're seeing Japanese interest rates rise, Japanese stocks are shooting up!
You seem to be implying Japan's scenario adequately mirrors the U.S. In other words, they have a high proportion of their net worth tied up in real estate, which is what I am pointing to as a driver of NIMBY-ism. If that analogy doesn't hold, then I would argue it's not an apt analogy and probably doesn't offer much in terms of policy insight.
Also, in the US, I don't think you can argue that real estate in general is a "fundamentally depreciating" asset. I don't think the recent history is illustrative, but over the long term real estate tends to be positive.
Real estate is fundamentally depreciating: you build a building, it exhibits wear and tear, it's worth nothing in the long run. Assets are usually valued off of future cashflows, which would be the long-run rent it can fetch. For most investments, you just shove this into a calculator with the current risk free rate and it spits out a number that's the current price. The rent declines in the case of a building with the wear until it's condemned, at which point it goes to zero. I'm saying this because just because something is fundamentally depreciating doesn't mean it won't have real yields, my point is looking at the yields from a capital appreciation perspective is kinda distracting where fundamental yields come from. Usually, capital appreciation is far more muddled (did capital become cheaper, leading to bidding up of yields? did people secularly just want to pay more for renting a house? etc)
Of course in the US there's been huge capital appreciation: housing and shelter went from 10% of CPI in the 60s to 40% of CPI today! Are you going to keep drawing the line and say "yeah, it's totally reasonable for us to continue it to have capital appreciation out-of-line of actual yields when supply and demand are balanced" - like how far is enough for you? 50% of CPI? 60? You're never going to be able to get the real appreciation that we've had over the last 40 years because that'd take us to 160% of CPI!!!
You understand that a real estate asset is not just the building, right? The land is what typically appreciates in value (maybe the building depending on labor/material costs). I've also already pointed out that recent history is anomalous in terms of property appreciation. Still historical averages are generally positive.
Regardless, all of that is a digression from the original question: does Japan have a similar dynamic where the bulk of household net worth is tied up in real estate? That's central to my claim that people are more protective of the assets tied to their wealth. In other words, we need to be careful about thinking Japan provides an example if there is a different wealth dynamic. It seems like you are trying to have a different conversation.
Sure, and anyone can make their own crypto implementation that's not based on reference, but what matters isn't the theory but the actual facts: the overwhelming majority of community meeting retirees are retired homeowners.
Look at your local suburban school district's bond: you'll probably see some age-based exemption on paying to get support because old people are by far the most engaged. Is that democratic? In the sense that its based on votes of a voluntary electorate, yes. Is it the representative will? Clearly not! You want to cluster elections around high turnout to maximize representation.
I could turn around and say "the outcome was bad for people willing to receive all of the benefits of a free-to-travel society in a bustling town but none of the costs." Of course if you say "mass tourism" it's bad, but idk, do you like to travel? If hundreds of thousands want to visit a beautiful town, should we limit supply in a way that makes it impossible for them to visit? There are millions of alternatives (you could ban lyft or cars for non-natives, you could restrict development to a resort and gated community on one part of town, etc) but the whole reason it's called NIMBY is because the only alternative NIMBYs have is freezing a town in amber while claiming a triple lock raise in pensions.
Zoning laws are, for the most part, a mistake. Any solution to housing prices that isn't a boost in supply either leads to scarcity or hideous Danwei-style planning that reaches into peoples life plans and the ability to afford a future.
Please answer the solution to people not being able to afford back yards. Price is a clearing indicator on supply and demand: you can either crush demand or boost supply. If nimbys block supply increases, you either have to pick people to kick out or forbid other people from moving in.
Where do you think the AirBNBs came from? Some people decided to move out, and the people that moved in decided that others would get better use experiencing the property part-time as reflected in market prices. Would you ban them from making this choice? Would you screen every buyer not based on their own assessed price but on ever so shifting "intent"? Would you make the intent they declare at the start binding?
EDIT: I'll bet you $100 to your charity of choice that physical constraints aren't binding in the case you're thinking of (this could be shown by, despite a lax / encouraging planning environment, no one building anything).
There are many factors, and Abnb can be one of them, but it’s not the only read. Zoning laws, economic landscape of the town, etc all play into to the lack of affordable housing. I would posit NIMBYism and zoning are likely the biggest ones.
AirBnB rentals are not making it criminal to build supply, local zoning regulations that benefit incumbents at the expense of everyone else are what make it criminal to build supply.
It's a defect at the intersection of capitalism, property ownership, and democracy.
Who is building skyscrapers in a cozy tourist town? Do you really think zoning laws are the only thing standing between tiny towns and a bustling metropolis?
If there is strong demand for housing, you might see bungalows turn into town homes or townhomes turn into mixed use 3 story flats... Which tend to be much more economically productive for the local gov anyways because the cost of infrastructure & services per person drops.
> Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people
That is fair, but also misses the point. The issue with AirBnB is not that they are evil company and must be regulated. It's that they operate in a system where housing is an investment vehicle due to artificially constrained supply and tax system that is riddled with well intentioned and widely abused property ownership cuts. At worst they have accelerated the issue rather than caused it.
> Airbnb are, in fact, in control of their own morality.
Not entirely, they are a publicly listed company and will get sued if they do anything that will hurt the stock price.
Speaking of, at some point even middle class families could afford to live in a hotel year long. Are these days coming back ? What happened for that to become uneconomical for a while ? (Is it a symptom of the middle class getting much smaller ?)
Oh please. NIMBYs ruined home ownership. Airbnb certainly hasn't had zero contribution to higher home prices, but abolishing short-term rentals hasn't fixed affordability issues anywhere it's been done.
As an aside, I own a home and now merely dream that renting should be as cheap as owning. Having equity in something that needs constant repair, loses heat on all sides, and has a bunch of fucking grass around it, is only equivalent to a certain amount of cash.
I suspect the real reason owning is cheap is not that it's inherently better, but because everything is cheaper when you have lots of money.
When I read stuff like this, I'm left wondering if I'm the only person who actually lives in a place that has been infested with Airbnb. On paper, my neighborhood is the Hacker News dreamland. Nobody has a yard. There is train service. Many people don't have cars. There is no mandatory parking allowance. There is no zoning restriction against multifamily housing. Virtually every unit is at least attached. Multi-use is fine. Plenty of buildings contain both housing and businesses. There isn't a lot of traffic. It's walkable. The only major restriction is you can't build higher than five stories. And we've been in a construction boom for nearly a decade.
But much of that boom has been tearing down multifamily apartment complexes and replacing them with luxury townhouses and condos instead. Almost nobody is actually moving into those places. They're 90% being purchased by investors, mostly out of state investors, to be used as Airbnbs. There is a significant categorical difference between investment property today and investment property before Airbnb. Before Airbnb, you rented via long-term leases, or you bought hotels and apartments in really shitty neighborhoods to use as weekly or even daily rentals for homeless people with jobs. Now you can buy as little as a single unit and the infrastructure to rent it out daily as a hotel room to much wealthier travelers exists without you needing to do anything extra.
With predictable results. Even in neighorhoods with little to no zoning restrictions, with virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
This is a short-sighted and simplistic analysis of how land value works. I'm in a terrific location. Walking distance from the Texas State Fair and Cotton Bowl. Walking distance from Deep Ellum with all of its hip clubs and restaurants. Walking distance from downtown. Walking distance to the Dallas Convention Center. You can get to the Longhorn Ballroom, Southside Ballroom, and American Airlines Center in under ten minutes.
The only downside for buyers of the past? It was a poor neighborhood. All of those multifamily apartment complexes being torn down were full of poor people, mostly dark-skinned, many of them non-English speaking. Now that their landlords spent the past 15 years doing zero maintenance until they could get the buildings condemned and force all of the tenants out without needing to have grounds for eviction, they can sell the land, and it doesn't make any difference if the experience of actually living here gets shitty because of all the parties and not having any neighbors. The buyers don't care because the buyers don't actually live here. The single-night renters don't care because they don't live here, either.
I did not hear a complaint about what it was doing to their property values. I did hear:
> virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
I thought the original idea of Airbnb was to open a spare room in the house you already own to guests. I've used it only in this way and it really helped with a financial crunch, and given that I lived there and was present while guests where there, there was no negative impact to the community at all. I know people have been buying houses just for Airbnb rental, but that's not everyone.
> It’s not the only factor, or even the biggest, but still…
But that's the key, really. In most places, banning short-term rentals will not move the needle on housing affordability.
It's like trying to optimize the thing that's causing 3% of the slowdown when things that are responsible for 40%, 30%, and 25% are right there, staring you in the face.
I live in Lisbon. Over 80% of housing units in the historic Alfama neighborhood are now vacation rentals. This is the most historically Portuguese neighborhood in the capital. It was the only neighborhood to survive the earthquake in 1755. Fado was born there.
Yes, it's a failure of government policy, but I don't think it's hyperbole to say that AirBnB and its ilk destroyed that community. That is, assuming you define "community" as a group of people and not a group of buildings.
If anything, there is a housing cartel that we need an Uber-like blitz (times a million) to destroy. In the same way that Uber ignored local taxi regulations, you would need to ignore local zoning regulations. Just "build, baby, build", become valuable, and then, with your fait-accompli in hand, bribe the various local governments -- just like Uber.
Except -- if it took the combined might of Uber's VCs, and the disposable human battering ram that was Travis Kalanick, just to disrupt the puny little taxi industry, imagine what it would take to change housing. Ain't never gonna happen.
> Comical to suggest that AirBnB "ruined communities"
it has absolutely done so in the same way that a bunch of motels springing up in your neighborhood would completely change it and not necessarily for the better
it also greatly constrained the availability of housing for locals, therefore pushing up prices, so that people not living in the city could visit for cheaper; probably ok if you're in the tourism business, otherwise not
Sure, but if someone started running heavy industrial concrete equipment in a residential zoned block 24/7, than the city wouldn't be blaming poor people for the issues.
The fact is you can go to travel websites, and the first 70k listings in some cities are for commercial hotel/share services running out of residential zoned homes.
Low-income people are easier to squeeze, and "with a computer" convenience doesn't make it an ethical securitization model. =3
Yeah I'm tired of this too. Real estate hyperinflation is almost entirely the fault of chronically under-building real estate due to regulatory capture by landlords, legacy homeowners, and speculators. The real estate market is more or less a cartel in quite a few places.
AirBnB is a small factor. I suppose it drives up prices, but only because supply is so absurdly tight.
100% of code uses 100% of resources. Let's not downplay the role of Airbnb as both a company and a phenomena for causing inflation. But more than that, remember that a lot happens at the margins in these markets: what's actually liquid or in play is a small part of the overall stock. So anything that messes with that will have an outsized effect.
You can define it as under-building, but that's only one side of the political effect. E.g. the UK net immigration rate has been pretty enormous, and it seems lopsided to call it under-building to have not built homes for a giant number of people coming from their previous homes elsewhere in the world to the UK.
Speaking as the son of an immigrant, married to an immigrant, for the people who can only think tribally, and must assume I am doing the same.
Underutilization of land as a result on speculation on the growth of land prices is a major reason, even Manhattan has massive chunks of real estate that are vacant, a land value tax would fix this.
That's an effect of massive demand, not a cause (or not a first-order cause). If you know (and vote for) loads more demand is coming the more you wait, you will wait. If demand were more limited to natural population growth levels, there'd be no point waiting.
I agree that both things are caused by one level or government or another. I'm just saying that under building is not the only explanation. It's probably not even the most natural one. It's maybe a second or effect once you've decided to admit multiple cities' worth of people each year.
Uber & Airbnb were really exploring a time-honoured model that has predictable effects. Taking underutilized resources and shifting to a "rental" model increases utilization of assets, broadening accessibility, and thereby increasing wealth... while simultaneously increasing the value of the underlying asset (making it less affordable). This isn't a new thing, or a surprising thing, nor is the scale of it the problem.
Where we get into a problem is when, due to lack of competition, you start extracting almost all (or perhaps even somewhat more than all) of the value that you're adding. That leaves everyone else in the same boat they were in before the rental model showed up, except comparatively worse off because there's a ton of wealth in there that has been concentrated in the hands of a few.
This is the kind of thing that having more competition would help with.
One of the questions all this raises for me is: what fraction of successful startups actually make society better?
I'm sure to get pushback here, but my suspicion is: most do not. Looking at companies like Facebook, Amazon, or Google, I'm kind of think they made it worse. Yeah, I know, some people benefited. But net-net, I preferred having more and better bookstores to Amazon. I don't like what google has become at all. And Facebook has never been good.
I think those companies increased efficiency, which in general makes things better as long as there is sufficient competition in their markets... Sadly governments have failed in stopping them from hovering up startups and like. So now they in many cases have too much power.
Google provided a useful lookup service at the expense of brainwashing society with consumerist propaganda and the complete destruction of personal privacy and the normalization of the surveillance state. It wasn't worth it.
Amazon inspired us to think we needed more cheap crap in order to inspire us to buy cheap crap that we didn't need. We aren't any happier than we were before we had the ability to buy cheap crap on a whim, but we sure do have a lot more cheap crap than before. That wasn't worth it.
Facebook is essentially as good at helping people keep in touch as any instant messenger that preceded it. But unlike those instant messengers, it's supported by invasive targeted ads, and consult the first paragraph for why this is a negative.
This has all been a waste. Society isn't any better as a result of these companies existing.
Google & Facebook push the advertising/attention economy business model, which rewards spreading misinformation & extreme viewpoints, leading to the rise in conspiracy theories and breakdown in discourse & trust in public institutions we see today. Amazon has killed a lot of local retail, removing OK jobs and replacing them with low-paying/low-skill warehouse labor.
I think there's arguments for both sides, but personally I land on the net-evil side for all 3 of the listed companies.
And the way publicly traded companies are so beholden to shareholders.
What, have a profitable, efficient business with happy customers and workers? Well, we NEED to see growth, so better find a way to cut the operating costs - no matter how much worse it makes the product, how unhappy the workers are, etc. Better try to capture more of the market even if it makes 0 sense in context and will end up being a massive waste of resources.
It may run the business into the ground, but as long as there's a quarter of growth they can't see anything else.
Startups and incubators are actually ruining everything while telling everyone they're improving everything.
I think it's kinda true, but govt regulations should have prevented it, which is not happening anytime soon because politicians act like startups and lobbies act like incubators.
For awhile I'd been using AirBnb by reflex, but after a few pretty bad experiences I started indexing it against local hotels before committing, and my experience has been that if you just need a place to be (don't care about kitchen) then AirBnB is not nearly as competitive as it used to be. So yes, AirBnB has made staying places cheaper, but the industry is also catching up. Concrete example is nightly rate for a studio in Paris vs the hotel next to it were +/- euros difference when I was there last year.
I agree and have had similar experiences. But note that the fact hotels have got cheaper/better is also part of AirBnB's influence. Competition makes incumbents up their game.
"Cheaper" is questionable. I usually find that, after fees, I'm paying the same, or more, than I'd pay at a nicer Comfort Inn.
Maybe I'm just unlucky but the last several times I've traveled, staying at an AirBnB simply made no financial sense. Sometimes I feel like I'm crazy, hearing people talk about "cheaper".
Comfort Inn is in the lower middle of hotel levels. Not roach infested, not tiny, but also not very luxury. It is about the cheapest hotel I'll let my family stay in. The rooms work, but they are tiny and everyone stays in the same room. For a similar price I find airBnB which has separate bedrooms for us and each kid, a full kitchen (this saves us a ton of money vs restaurants and is healthier), and generally some other rooms to play in. We don't (rarely) get a pool which the kids miss, but overall it is a much better value. I agree the price is similar though.
I don't like using AirBNB, for all the usual reasons, but every time I travel it's no comparison. To Vancouver a couple years ago, it would be like $400-500/night for a decent hotel in the area I wanted to stay. The apartment we ended up renting through AirBNB was I think $150/night, and that included a fully stocked kitchen & in unit washer/dryer. Similar prices for a trip to San Francisco earlier this year. I don't like the societal effects, but it is massively cheaper for much better service.
That was true like 5+ years ago. By now market prices of housing have gone up to match the tourism profit lure I guess. It seems common nowadays for the owner to own multiple apartments, like 8+, where as in the beginning it was one or two.
I prefer ordinary hotels nowadays. Especially when travelling with children.
Airbnb is great until there is an issue and then it is a nightmare.
I think it will be like Amazons coming doom, death by a thousand cuts. You can have this horrible model that can't handle edge cases and until you burn too many people, it seems to work. But once you have sold fakes, or ruined (or added thousands in expense) vacations to enough people I know, your business is dead to me.
I’ve been thinking a lot about this. There seems to be an “optimal” scale for tech — Google used to be amazing and wonderful about a decade ago, until it reached a certain scale. So were Facebook, etc. And even the positive effects of darling unicorns like Uber and Airbnb are actually more in the business model they pioneered, rather than the app itself. In Eastern Europe I use Uber alternatives which are usually about as good as Uber or better. Only Airbnb is a “naturally” global company by its very nature, because it is for travel.
Maybe the natural limit to scale should be state sovereignty (i.e. protectionism). I actually believe that consumers benefit if countries ban or tax the likes of Uber and promote a homegrown alternative. (Imagine if each country had its own Google customized to the local language and culture, it might actually be a better experience for everyone). I’ve heard that Baidu and Yandex are better than Google for local content.
Too bad the EU didn’t catch on with this. Europe could’ve outcompeted the US by playing a different game on quality and boutique charm instead of scale. Instead of pathetically trying to become a large homogeneous market like the US (and then failing badly and then regulating “privacy” out of spite), the EU should’ve actually been protectionist in favor of its members and it would’ve been interesting to see what marvels could originate.
> Those were the innocuous founding ideas behind DoorDash, AirBnB, Uber, and Facebook. At scale, they would ruin communities, put restaurants out of business, destroy the dream of home ownership, and eventually undermine democracy itself.
Impossible to assess. These things happened, but as a chemistry experiment. You'd need to be some sort of $Diety to track the individiual atoms in the solution and judge the alternatives.
Quit this fruitlessness while you're behind, say I.
> The bump in interest rates has cooled things down
This is the actual issue. When ZIRP was introduced (and then RE-introduced, sigh), it makes money appear to be worth almost nothing. Which means everything looks valuable.
To be honest, you could say this about capitalism in general. Everything has to be huge no matter what industry it's in or what the product is, just because shareholders demand that impossible infinite growth.
I think this could largely be an issue with public or VC/PE funded companies. There's plenty of private companies of small/mid size that make plenty of money but don't feel a need to grow excessively. You could think of the local plumbing company, or a small boutique consulting firm. They want to grow, but there's a natural barrier that's hard to cross without becoming a very large company and changing the nature of the company that the owner may be enjoying.
I have always wondered how that would apply to software companies though. If you make something that works really well and everyone wants to buy it, you could grow fairly large financially without needing a ton of people if you just focus on that one program that makes you successful. I imagine it's hard to not feel a need to scale up dramatically when you have millions of users/customers asking for new features.
Valve Corporation is one of such private companies, mostly known these days for its Steam game updates and store platform.
Being private didn't prevent it turning into a monopsony, ironically for the discussion, maybe because its competitors were mostly public companies (and so didn't care enough to do a good job) ?
They are not immune to walled garden issues though (SteamWorks), but maybe their private structure helped enshittification to proceed much slower ?
Human nature in most big culture seems to be trained to demand more (even if not always money). If there was any group of people that were "content with what they had", they were outpaced in development by the ones that "want more" so there will be minor (or inexistent) now.
I do wonder if there is any smart solution to this issue.
The observation is that the "take take take" behavior arises out of a sort of survival-of-the-fittest mechanism. Both preceding comments seem to lament this, rather than relate to it.
It's not about you. It's about another "type" of human. One that wants more. Maybe you don't (good for you, probably you are happier!). But the problem is you will need to "fight" against the other "type". What do you (personally) do then to prevent the other "type" grabbing more? Whatever other people like you tried during history (hundreds of years ago) seems not to have worked (the grabbing types are still grabbing in all culture I have sufficient knowledge of to comment on).
It's not capitalism. It's government bonds. If you can get a guaranteed return from bonds, then any risk must beat the bond market. That increases the cost of capital for businesses, so they have to produce greater returns.
Any advance, early industrial revolution; late nineteenth century industrialization; twentieth century vertical integration; globalization; internet disintermediation etc. will cause some dislocation. Often unintended, and rarely foreseen. Ultimately it all settles down to a new equilibrium, until the next perturbation. It's a bit disingenuous blaming VC's, or scale, or anything exogenous. The system's capacity for change will always outstrip the current institutions' abilities to fully buffer the change. If we focused on improving the institutions responsible for that function we'd be performing a more useful function than trying to limit the change.
Odd piece. It highlights some hyper-scalers but it needs to work on justifying 'how they ruin everything'.
"At scale, they would ruin communities, put restaurants out of business, destroy the dream of home ownership, and eventually undermine democracy itself."
You have to stretch to get even one of those claims to
be true.
Has DoorDash put some restaurants out of business, probably. Have they put restaurants out of business, absolutely not.
Has Airbnb raised home prices, yes by around ~1%. Have they destroyed the dream of home ownership, lol no. We're talking about ~$5k on the loan
which isn't making or breaking anyone. And claims on destroying communities are dubious because they're just not that dense in places where people actually live.
Has Facebook increased political polarization and sent people down the right-wing pipeline, yep. Would
this have happened anyway with a constellation of smaller social media sites, it already has.
I'm grateful for VCs throwing money around at various things that may or may not work. We would not be in a better world if all money went into low risk investments.
Given that we've been throwing cash at every conceivable idea for the last ten plus years, yet when speaking of unicorns we still have to refer back to airbnb and uber, seems like we're well past "peak unicorn" and well into the "horse with a mild concussion" era.
It's also disconcerting how much their success seems to hinge on using technology as a lever to break laws or social expectations, as opposed to technology as something that itself empowers humans to be more productive.
Getting a taxi in my college town in 2005 was agony. Make a phone call from a loud bar and shout at some guy who can barely tell what you're saying that you want a taxi and then maybe if you're lucky they show up in an hour and cost 3 times as much as you expected (and that's on a good night!) vs. "press a button, get a ride" (and have a feedback mechanism for horrible drivers or gross cars, etc.).
Uber has issues but honestly it's night and day compared to what taxis were like. And they decrease DUI's.
It's a better experience for sure, and that's why they got the viral start that gave them the opportunity to eat the world, but presenting that as "worth it" seems pretty dubious considering:
- Tons and tons of users buying vehicles they can barely afford to drive for them
- Tons of restaurants already struggling to get by saddled with needing an iPad or two at their counter to intercept online orders, and needing to charge more and anger customers just to break even on the fees
- Huge amounts of sexual assaults because Uber didn't vet drivers
And lest we leave it merely implied: Uber is worth what Uber is worth because it's a taxi company that owns no Taxis and pays no taxi drivers a proper wage. That's why it's a billion dollar unicorn. Same as AirBNB is a hotel chain that owns no hotels, UberEats/Doordash are food delivery services that don't own restaurants, Instacart is a grocery chain that doesn't own grocery stores.
Honestly if you want to really be cynical about it, the true path to finding the next tech unicorn is figuring out how to be a $business that owns none of what a $business normally does, and hires no employees that $business usually does, and then wrap that up in an app, and convince poor people to do the work for you because they have no other options. Boom, unicorn.
The way taxi companies had languished in obsolescence was definitely a problem, but I struggle to consider if Uber was the best way to solve that on any front.
Lots has been written about how way too much contemporary US business is about value extraction not value creation.
Put differently, a common business model in late 20th century and early 21st century US capitalism is to find a transaction that is already happening "at scale" and figure out how to insert your own company into the transaction and extract some percentage of the value.
The primary way of accomplishing this is to create a (new) story to tell about the value you claim you are adding to the transaction ("it's so easy", "we have an app for that", "so much quicker") even though in many cases nobody (or very few people) were asking for whatever you bring to it.
This does not mean that there is no value added. What these companies do not represent are new transactions: no new products, no new macro-scale services ("but you get a car with your phone now!" still boils down to "someone will drive you where you want to go").
> Lots has been written about how way too much contemporary US business is about value extraction not value creation.
I wouldn't even say it's isolated to businesses anymore. This is the same economic forces that's prompting all the crypto nonsense from a few years back, bullshit businesses like drop-shipping, social media influencers, etc. There's just nothing left to build anymore it seems. Every industry is stagnating, year over year there's no crazy new innovations anymore, nothing to get excited about. Just dumber and thinner versions of things we already had.
The tech industry is currently bending backwards so far it's collective spine will snap any second now trying to convince people LLM's are the next big huge thing, and there's just nothing there. 150 billion dollars for fancy autocomplete.
>The tech industry is currently bending backwards so far it's collective spine will snap any second now trying to convince people LLM's are the next big huge thing, and there's just nothing there. 150 billion dollars for fancy autocomplete.
I wouldn't say nothing there, and that something is something. Translation, rephrasing and a lot of management tasks like summarizing what happened are way easier and better than any previous models I've seen.
Creating images and logos is usually very constrained by what you can describe without describing what's not there, it's impressive nonetheless.
Autopilot code autocomplete is pretty good, but not replaces all engineers good, rather increased efficiency good.
The problem is they all lie about it being the thing that will replace all knowledge work. CEOs are buying it up and salivating.
It could replace a lot of middle management at my company. But those are the people that are staying.
What's worse is that "there's just nothing left to build anymore". There's tons of work that needs to be done in the real economy (infrastructure repair and upgrades, housing, especially infill), but can't be, because the asset economy is much more profitable. Everything seems useless because it's not being built to use, it's being built to inflate equity "mystery box" values.
Good point, but I am not sure it's all quite so black and white.
Maybe you are right for the US, but here in Germany at least, and I could be wildly wrong about numbers:
- Uber: not a game changer, popular with a certain demographic, but taxis were mostly fine anyway
- airbnb: ok, huge
- doordash/etc: maybe executing a bit better, but delivery has existed just fine
- instacart et al: now we get to the real thing. groceries delivery had only been done by a couple of chains, and sometimes only for a couple years, then abandoned again already. so you never really got whatever you wanted, from where ver you wanted. Paired with our sometimes very limited shop opening times (6-20 at most, in recent years more, but just in some states) this was different, e.g worth it even if it is not your weekly haul and/or alcohol for a party.
Airbnb has destroyed tons of communities and worsened the already terrible housing crisis.
Doordash/Instacart/Uber Eats/etc are just market solutions to the problem of everyone being worked too fucking hard and not having the time to exist as people anymore. And while in principle the idea of "hiring someone who has nothing to do and having them do your grocery trip" is perfectly fine, even innovative, in practice what it amounts to is someone making less than minimum wage while putting mileage on their vehicle and burning fuel while a startup in the bay area collects the lions share of the fees from the customer. My gripe isn't with the business itself, the concept is fine. My gripe is that Instacart takes the money that should be going far more to the person actually doing the work. They should of course collect some: what they are doing is not devoid of value, for certain: but they should collect significantly less.
Incidentally that's the same problem I have with Uber. Matching people who want to work with people who have tasks they need to do is not inherently evil. What's evil is doing that, paying the people working peanuts, and charging out the ass for the service anyway so you can pocket more profits for being a middle man.
Honest question from a non-economist: where is the distinction drawn between "value extraction" and "rent seeking"?
Even the canonical example of lobbyists can make some ambiguously defensible position that they add some value; e.g., "We make sure constituents have a conduit to their representative"
"Rent seeking" requires that you own ("control") a thing people want/need and will/can pay for.
"Value extraction" almost implies non-ownership, and represents more of a contractual arrangement whereby you provide X to a set of transactions that would happen without you, and in return you receive Y. Obviously if Y is universally of less or equal value to X, nobody is harmed. But if Y is of significantly more value to a given demographic or particular circumstances, then it is not clear that this is a win for society overall.
Where they overlap is if you have managed to create sufficiently high barriers to entry in the field of "providing X". This is tantamount to ownership of a resource that people want, and you're the only provider (or one of just a few).
Any service that took money for rides would turn in to this. You know lyft? Before it was lyft, it was zimride. And zimride was just a way for college students to share rides places, a bit more organised than the Craigslist ride share board (which I used often)
Then zimride said “you can use that gps receiver you’ve got in your pocket to find people who need a ride near you and we’ll suggest how much gas money to split”. But pretty quickly people started just taking passengers even when not on their own trips, and lyft morphed in to…. Basically Uber.
The other trick is to dodge the regulatory requirements that your competitors are saddled with.
see: regulatory entrepreneurship
Before Uber was available in Orange County, circa 2010-2011, I used an iPhone app to call a yellow cab to pick me up without having speaking to a dispatcher. I was able to give feedback about the driver too. Uber-style apps to hail cabs did exist, maybe they just weren't rolled out to all markets.
Before the launch of UberX, the Uber app positioned itself as a convenient way to call a black car/limo and, for drivers, to get some extra business between their "regular" calls. It was a semi-luxury though it only cost a bit more than a yellow cab (I only ever used Uber pre-UberX to get to/from the airport).
Really, other than surge pricing, I don't think Uber innovated very much on the tech side. Their success in disrupting cabs was rather down to flooding the market with supply, oftentimes in ways that flouted the law.
For what it's worth, around here you call an ordinary taxi exactly the same way: Press a button, get a ride. Been like that for a long time.
There's nothing like competition to get an industry to shape up. 15 years ago, taxis in Pittsburgh were definitely more like GP described.
I'd be willing to bet that "long time" doesn't include pre Uber days
Well.. maybe.. but when that app appeared there weren't yet any Uber drivers in my country. They were considered illegal by the authorities.
Uber did this. Whatever else you think of them, they massively uplifted an entire industry's customer experience, and pretty much globally. That's an insane achievement.
In this particular case I'm pretty sure the taxi app was completely independent. Nobody actually expected Uber around here (and in fact I've yet to see any), and everyone and their mother added app support for their services. They already had a history of adding new ways of getting a taxi, as and when technology became available. And, and taxis in general are connected to a taxi service central it's easier to come up with such a thing.
With their specific app?
In the last 2 weeks I've used the Uber app in Washington, New York, Miami and Stoke (UK). One app, 4 cities, 2 continents.
> Washington, New York, Miami and Stoke
It's about time Miami got some international recognition.
The app covers all the various taxi companies around here. It's not international.
That's one problem. I typically need a taxi when I'm in a remote city a long way form home. Uber gives me a common app that works from Sydney to San Francisco. I'm not going to land in Chicago and work out which of the myriad of apps I need to get.
Now if it was instead a website, sure, much easier. No need to create accounts etc, just visit "chicagotaxi.com", perhaps shown on a sign at the airport/station/etc, then book and pay with applepay/googlepay.
But installing some application, signing up, having my data stolen, all to be told "no taxis available", is the reality of a local app.
> I'm not going to land in Chicago and work out which of the myriad of apps I need to get.
But big airports have a taxi line. You stand in it, and you get a taxi.
I flew into Washington DC last week, and it was faster to stand in the taxi line than to call an Uber and wait for it to arrive. On the other hand, it was faster to get an Uber back to the airport when I left than it was to catch a taxi.
And of course, certain cities have decent transit systems. Both Chicago and DC (and hundred of other cities) have transit fare cards you can put in the wallet app on your phone. Some, like DC don't even need an account or download. Just add money with the payment card already stored in your phone and go. The experience is better than Uber - assuming the transit system is any good.
I arrived at Miami station last week and got an uber, not one of the waiting taxis, because I wanted
1) Guarantee of payment by card
2) Guarantee of receipt
3) Guarantee of going to the right destination
The week before I landed at Dulles and got an Uber. The queue for the taxis was very long, but the wait for Uber was hardly quick either. Last time I took a taxi in DC they refused to take card. That was pre-covid, but why would I take the chance again.
Taxi companies did it to themselves.
So then it depends on taxi services. I'm not in the US, and all the three points you listed are more than guaranteed by actual taxi companies around here. In addition to that, I also will be made aware of the price in advance.
How is the situation with Uber and insurance these days? I remember from years back that Uber drivers didn't have the insurance that taxi drivers need (though that may vary by country). As one who has actually experienced a car crash involving a taxi (I was in the taxi, but fortunately on the left side in the back seat when another car crashed into its right side), I have a keen interest in insurance..
I suspect it varies by jurisdiction.
In the UK it's a normal private hire company, just less disreputable.
> Been like that for a long time.
Since before Uber/Lyft?
Ireland is like that but without a decent way to report dangerous drivers or racist rants
Competition did that.
Sure, but there's a difference between "that kind of success" and "any success". To illustrate, imagine an alternate timeline with a company called "Rebu", which provides all the same phone-apps and servers and whatnot for thousands of taxi-services across the world to adopt, replacing their shitty old "computerized dispatch" systems.
Do you believe Rebu could that have managed to draw the same level of venture-capitalist money and unicorn-ness and hype, even sharing the same core technologies, code, and product features?
I don't think it would, and I'm asserting that comes from business-plans, labor relations, legal challenges, government lobbying, investor marketing, etc., which in several cases have been, er, ethically-problematic.
I think you're missing a key bit: taxi companies weren't interested in this sort of thing. In most municipalities, taxi service was a protected, government-granted monopoly. The reason taxi service was always so bad was because there was no competition, and no incentive to improve.
So why would they bother to adopt "Rebu"? It's nothing but downsides: their taxi drivers have to work harder, have to be more polite and drive more safely, have to have cleaner cars, and have to be more accountable in general. Not to mention of course Rebu is going to take a cut of all rides booked on their platform.
There was no way to make regular taxi service better without structural and legal reform that the incumbents did not want. The only way to fix it was to go outside the system and do something sketchy. And it worked! For all their issues and controversies, the ride-hailing app experience is amazing, especially when compared to old-school taxi service. Some legacy taxi services have stepped up and improved a bunch since then, and others have just faded into obscurity.
I think we're doing a lot of work to get into the mind of cab companies, but along those lines: they weren't interested because the market isn't really that large. Uber is barely profitable now after raising rates tremendously and aggressively fighting any kinds of workers rights initiative. That means two things. First, people don't think a typical ride is worth very much, and second, people don't really have that many places to go. The destination list is 90% work, the airport, and nightlife. These are not the underpinnings of a multibillion dollar business... unless you invent self-driving cars or achieve a good old fashioned monopoly (a lot of the reason many cab companies went out of business as you say is that Uber failed to invent self-driving cars).
But overall this was pretty bad investment for humanity. Let's just stipulate it's a lot easier to get a ride at a reasonable price and that's a good thing (not a given considering increased traffic and greenhouse gas emissions, plus decreased pressure for cities to move away from car-dependency). Was it worth multiple billions of dollars and software engineering hours? Like, assuredly not. It's a big "LOL" drawn in lipstick on a portrait of the efficient market hypothesis. It turns out the private sector is also great at just setting huge piles of cash on fire.
The problem is cost. For most people owning and driving their own car is much cheaper than hiring someone else to drive them. Many people would like someone else to take care of the car and driving, but drivers need a reasonable income - if a driver works for your 2 hours per day that implies of your 8 hour day at work 2 hours are spent working to pay for that driver (of course drivers typically make less than a "white collar professional" but still a significant portion of your income goes to your driver). Which is why taxis always hung out at airports - often they would wait in line for an hour to pick someone else, with smaller amounts hanging around around hotels and bars - the few places where people who owned a car had reason not to use it.
Self driving is the only way uber or a taxi can be a large business. The cost of labor is just too high and so most people are forced to learn to drive.
Even with the above I question if self driving is really worth it. If you own a car and have it parked nearby it is ready to go when you want to leave, and better yet you can store your stuff in it. Combine that with rush hour - most people are traveling at about the same time every day, and some people wanting nicer cars than others and it is hard to see how it can work out. (unless you live in density such that parking is hard - but then transit must be your answer not individual cars since self driving cannot solve traffic)
The other problem with the business model is with self-driving cars, unless you have exclusive self-drive technology, the barrier to entry to other carpooling options is quite low.
In fact you could easily see car manufacturers offering such services - something like Zipcar but more convenient as the cars can self redistribute.
I find it hard to believe Uber will ever break even ( not on the day to day costs - recouping all that upfront investment ).
Having said that, the likes of Uber have changed the world - so the money wasn't entirely wasted.
I don't think car manufactures will offer that service - it gets too deep into weird monopoly laws and the like that they want to avoid. Plus it is a distraction from their business. They will instead sell to others who offer that service.
Generally shared cars only make sense when someone drives very little anyway. Cars are expensive and so shared cars are either too expensive to be used often, or very hard to get at. Renting a car for a weekend is about half the cost of a monthly payment on the same car, but if you buy the car you have it the rest of the month (and if you buy a car you have used options or keeping the car after it is paid for to bring the total cost down - you will have to pay maintenance costs but those tend to be much less).
Every business in a competitive market is "barely profitable", that's how capitalism works. If a company is raking in massive profits that's a sign that the market is distorted somehow -- a monopoly, collusion, regulation, etc..
Maybe, but the point here isn't that Uber underperforms, it's that their innovations didn't sufficiently expand the market. I'm arguing cab companies saw that coming, whereas Uber/SV didn't and spent billions of dollars finding out.
It's an indictment of the VC model where essentially you build a company that hogs all the value for investors. If you think this is a good model, i.e. that investors make better decisions than governments, labor, and the market, then I think you have to reckon with the utter wastefulness that is Uber. A better thing here would have been to just build a ride hailing app for existing cab companies.
Yes, but P implies Q does not mean that Q implies P. IOW, a competitive market implies a lack of profits, but a lack of profits does not imply a competitive market.
One thing that most people get wrong is that Uber doesn't offer taxi services.
In the US at least, there are two classifications for "car for hire."
One is street-hail - you wave down a car or get into one at a stand. That was heavily regulated and taxi companies had the relevant licenses.
The other is "town car". You call for a town-car and it shows up. town-car was very lightly regulated.
Yes, every taxi company offered town-car services, but there were lots of town car companies that didn't do street-hail.
Uber/lyft are town-car companies. Neither one does street-hail.
The UK has a similar distinction. "Hackney carriages" (the classic "black cab") are allowed to pick-up passengers on the street, while private hire vehicles (often called "minicabs") can only be used by pre-booking. The former are more regulated than the latter. Ubers are minicabs.
(Black cabs don't have to be black, but usually are. As to why they're called "Hackney carriages" - the last person to know the reason probably died in 1863.)
It is indeed a hackneyed term.
I think the difference between the hypothetical Rebu and Uber is one wants to fix the system, and one wants to be the system. The Taxis had to be disrupted, but Uber doesn't flinch at being just as bad wherever they can get away with it
We don't have to imagine - Flywheel was that company.
It got reasonable funding but couldn't get taxi companies to sign up.
Things got a bit better when it became clear that Uber was going to kill taxi companies but too little, too late.
I'm confused to the argument you're making as some of those are clearly ethically-problematic for Uber while legal challenges, government lobbying seems core to the business.
The taxi market, in the US at least, was a textbook case of regulatory capture to stifle competition. Google "taxi medallion prices nyc" for an example. Uber was clearly the 'good guy' in flouting those laws and later getting them repealed. The cartels that controlled the medallions had no interest in improving the technology until they had competition.
Then why was uber a thing in other cities around the country where such laws didn't exist?
Because it also had massively better UX than any previous taxi journey. Order from phone; price up front; pay in app; know the licence, make and model of the car coming to get you; see where the car is on the way; travel in any city (except, say, Oxford, UK, unfortunately). All new features for taxi use.
Haha. Thanks I needed a laugh. 'Uber clearly the good guy' haha. I too remember a simpler time when we were all so naive.
The takeaway here is that rather than invent some high tech wacky thing, just target some existing cartels/government monopolies. Hotels (AirBnB), telecommunications (Facebook versus AT&T Bell), taxi services (uber/lyft), broadcast television (netflix), radio (spotify), and spaceflight/rocketry (SpaceX) come to mind as successes.
What else is there?
- Boeing - Just need to invent a better commercial passenger airplane
- Lockheed - The day of 150 million dollar manned fighter jets is coming to an end.
- Electricity distribution - PG&E or Southern California Edison. Only way to crack this is with decentralized power distribution and batteries
- Waste Management - Trash collection, recycling, and processing
- DeBeers Diamonds - Diamonds can basically be synthesized in the lab at will now.
You're right, but you're treating that as a net-negative. The reality is that the government regulations structured taxi services in most cities in the world into cartels that operated in a way that was to the detriment of their customers. Uber broke the taxi cartel, and yes, it broke the law to do it, but it wouldn't have been possible to do this way if they'd tried to work with the existing taxi companies, because their anti-customer cancer would have infected Uber while it was young and before it could even scale. Part of their value proposition is their scale, itself.
Services like Uber and AirBnB have also introduced a concept through technology that was previously almost unheard of in the private sector: a nationwide blacklist.
Bob Smith annoyed enough Uber drivers in Milwaukee that now he can't get a ride in Poughkeepsie. Maybe that's valid, maybe it's not. But it is pretty new, and I doubt it was in the slide deck when Uber hit up the VCs.
The social aspect of these sorts of things can't help but get entangled with the politics of social mores. Maybe Bob was giving the Uber drivers wet willies. A lot of people would think he caught that ban fairly. Maybe Bob was too politically incorrect for the Uber drivers. Not quite so sure he deserves to be sentenced to hoof it until the Sun burns out. How do we know the bans are of the fair former and not the latter? We don't. It's a private company, they can be as opaque about this as they want.
Good, bad, who knows, but it certainly makes for a completely different landscape.
I agree that this sort of thing is a problem, but it's not a fundamental problem with the existence of these services. It's just a problem to be solved, perhaps through legislation on how suspensions and bans are allowed to work, and how people ought to be able to appeal them.
The legacy taxi services had this problem too, though, as you note, not on a global level. Pre-Uber, there was one taxi service that stopped taking my calls. I have no idea why. I had no way to appeal this, or to even get in touch with them to find out what was going on.
In the meantime, Bob still probably has public transit or local old-school taxi services to fall back on (which somehow still exist). Many areas even have local ride-hailing apps. Worst-case, Bob will have to rent a car when visiting other cities.
>I agree that this sort of thing is a problem, but it's not a fundamental problem with the existence of these services.
Well, it kinda is a fundamental problem, with regard to the original article's premise that scale is a problem. These services can't operate on VC's terms without scaling up to a national or global level. And this, by its nature, means your Uber problem in California follows you to Georgia, and possibly to Uzbekistan.
What if Uber shares its ban list with Toasttab? Or if Uber buys Toasttab?
Laws may be able to address this, but laws always lag. Sometimes by a lot.
Uber's goal from the start has always been to replace human taxis altogether with robotaxis. This is just phase 1 (put most taxi companies out of business).
Your view comes up every time. Basically you are claiming "Taxis sucked, so it was ok that Uber broke a lot of laws and social conventions to make the situation better".
And who knows, your view might be right.
"Taxis are terrible" and "Uber is basically an illegal taxi company" can both be true things.
Ultimately it will be better, because a temporary wrong is nowhere near as big as the ongoing, forever-accumulating better experience people have now. The only exception to that is that they should've background-checked drivers first.
this is still the experience in less developed places like italy
It’s more about regulations rather than development. It’s forbidden here, so taxi drivers can still make a good living rather than subsidizing a billion dollar company
Er no, they totally transformed things through technology as well. Their product was fantastic. Hail a cab in the 2000s in the UK and tell me Uber had no improvement for its customers.
Right but how much of this improvement came from the invention and popularity of smartphones and how much of the innovation came from a company called Uber.
Struggling to see the relevance of this question. How much of Uber's "innovation" was actually Ford/GM/Toyota innovation in car manufacturing?
But those car companies are just riding on the coattails of Exxon, Chevron and the like with their improvements in oil discovery and hydraulic fracking.
I understand GP's point, but to yours I'll add they have also open sourced and mainstreamed some of their key technologies. So it's not all bad.
Not all bad != good.
Pretty hard for me to lament laws being broken when the laws boil down to "you're not allowed to compete with this monopoly".
Do you lament e.g. Uber knowingly breaking laws, and then in the knowledge that they are knowingly breaking laws and under scrutiny for doing so, also actively building functionality into their systems that helps them criminally evade scrutiny?
https://www.theguardian.com/news/2022/jul/10/uber-files-leak...
https://www.nytimes.com/2017/03/03/technology/uber-greyball-...
This is a level of deliberate, optional fraud that goes a step beyond, is it not? It's organised crime.
No, I don't care about that at all. Why do you care?
Someone, generations ago, made a law saying people in your town could only solicit car rides if they paid a special tax, and now you're out here vigorously defending that dead model.
State-enforced monopolies are often legalized corruption. I care more about that than some corporation using their resources to break that corruption.
> Someone, generations ago, made a law saying people in your town could only solicit car rides if they paid a special tax, and now you're out here vigorously defending that dead model.
Congratulations on a text book case of Chesterton's Fence [0]. You've mischaracterized the purpose and nature of the law.
1. we have cars, we have people willing to drive them around to take people places
2. we want some regulation of this new business/service, to make things safer for the riders
3. we want some regulation of this new business/service because otherwise competition will force the price so low that nobody can make a living offering to do this (and we consider the service valuable).
So, we introduce a scheme which says you have pay for a license in order to provide this service. This creates driver identity and "responsibility" which we want for riders. We limit the number of licenses so that we do not have too many drivers chasing too few riders, and thus offering a more reliable income to the drivers, ensuring that the service remains available.
[ time passes ]
Uber introduces a scheme in which there is almost no floor to what drivers might be paid, but manages to tell a story that convinces enough people that they could make a living or at least a significant amount of extra cash by driving without the required license. Uber also assures riders that even though there is no official license, their technology can provide the driver identity/responsibility that it offered.
Result: better ride hailing for riders, money for Uber, and a steady, constant turnover of drivers "just giving it a try because I heard you can do really well ..."
As usual, a mixture of pros and cons, which vary depending on which perspective you are taking and your moral/political philosophy.
>Congratulations on a text book case of Chesterton's Fence [0]. You've mischaracterized the purpose and nature of the law.
You have created a convoluted ex post facto defense of taxi laws which sound plausible but are likely wrong.
"Chesterton's fence" doesn't say that "the most socially positive explanation is correct".
The simpler explanation is one of "concentrated benefits, diffused costs". A group of taxi owners helped implement a state-enforced monopoly at the expense of the rest of society. Technology enabled a new group (Uber) to concentrate benefits further at the expense of the relatively diffused monopoly-holders. Society benefited in some ways (easier rides) while likely bearing costs in other ways (drivers subsidizing Uber).
> You have created a convoluted ex post facto defense
Why is it convoluted? Watch the process that has happened with every other technological development in the last (say) 40 years? How is what I've described any different?
> A group of taxi owners helped implement a state-enforced monopoly at the expense of the rest of society.
You assume that the downsides of the "monopoly" (I'll ignore the twisting of the conventional meaning of words there) are larger than the upsides, and yet you seem to similarly assume that the downsides of Uber are smaller than the upsides.
Society got a new line of work that made a reasonable living, control over the drivers in the interest of safety and accountability. Those are not exactly like the discovery of fire or the dawn of agriculture, but they are not of zero worth.
I also note how your description of "A group of taxi owners helped implement" has an implicit negative tone, something alone the lines of regulatory capture. Yet we regularly hear calls for regulations to be created with the participation of those affected by it, so that legislatures and civil servants don't make stupid mistakes/decisions.
Look, I'm not really interesting in defending the medallion systems. Taxi service in many places sucked under it and conditions for many drivers weren't exactly what society might have been aiming for.
But tearing it down in favor of another mixed bag of pros & cons needs to be done with a subtle weighing for the relative pros & cons, not the reckless and giddy greed of a company like Uber.
Isn’t the entire point of Chesterton’s fence to consider things ex post facto? How would you explain places that have regulations for taxis but not artificial scarcity? I don’t think the collusion argument is simpler at all. That is not to say it doesn’t explain the situation in certain places of course.
Do you ever visit or live in a place with unofficial cabs preying on people at an airport? You're acting as if laws were only made by corruption and not because people were screwed over.
I think Uber is probably a net good thing but I also think Uber should be accountable for the laws they broke. Also, Uber, Lyft, Airbnb also did exactly what was expected and increased prices to a ridiculous degree once they became the default standard and went public.
I remember official cabs that were also predatory (especially to gullible tourists) and abusive (especially to minorities). Uber's star rating system is not great, but it's vastly better than the blatant customer-ripping-off assholism of the pre-Uber taxi era.
> Why do you care?
Not OP, but I believe in the rule of law, and in a republic governed by elected officials.
It's not OK for powerful actors, especially companies, billionaires, and government officials, to willingly and knowingly break the law.
Thank you. I do generally agree with you.
In this particular example with Uber, I see "powerful actors" many decades ago breaking our social contract by using the force of the government to implement a monopoly for their own profit and everyone else's expense. Legal, yes, in the strictest sense of the word, but certainly against what I value about my particular republic (USA).
So Uber here is more "the enemy of my enemy is my friend" than a company I actually admire.
So clearly you aren't a fan of Gandhi. He also very deliberately broke the law. And not a fan of Nelson Mandela either I guess.
Not all laws are good. Using the taxi licencing system as a way of extracting tax income is one example of a "not good" law that somehow wormed it way into many societies.
It might never have changed unless an Uber had some along. The taxi licencing scheme has the unfortunate characteristics of being inefficient but not egregiously so, and had put golden handcuffs on a group of people making a valued contribution to society. Those handcuffs were the taxi licences, which became the taxi drivers retirement fund. The taxi drivers always fought any threat to the value of those licences long and hard. Those two characteristics ensured a politician would spend have to spend a immense amount political capital to fix something that had only a modest benefit. It looked like we were doomed to suffer from this tax parasite forever.
But then a seismic shift in technologies came along, and it was not so easy enforce the laws that protected the parasite. The way I remember it the taxi drivers screamed blue murder as their net worth went rapidly to 0, but the reaction from law enforcement was ... muted. I'm sure with a concerted effort the politicians could have made life so difficult for Uber the parasite could have survived. The taxi drivers certainly thought so. But it looked to me like my republics elected officials chose not to spend political capital on doing that. It was almost like they were glad to have an excuse to rid themselves of a parasite.
Now the carnage of the taxi drivers net worth going to zero is over. That aside, most things have got better. With the monopoly broken there are more taxi companies than there were before, taxi availability has become better since you don't need an expensive licence to put one on the road, and prices have dropped.
Sometimes the ends doesn't justify the means, sometimes it does. This looks like the latter to me.
> So clearly you aren't a fan of Gandhi. He also very deliberately broke the law.
I have to say this is one of the silliest takes I have ever seen on HN.
You only need to look at the way Gandhi broke the law, the methodology of his disobedience, to see that you cannot possibly make a comparison with Uber that shows them in a good light. It's absurd to draw this comparison.
> and now you're out here vigorously defending that dead model.
This is a bit of projection. But good for you, being open about your support for fraud :-)
Taxis were fraud to begin with. Anything that can hurt them and make my life easier is a plus in my book.
Sure, that's bad. But that has nothing to do with the fact of their existence.
Laws aren't universally good. Some laws are bought and paid for by special interests. Some regulations are the result of regulatory capture. I am totally fine with people or companies skirting our outright breaking those laws in order to make things better for people.
But yes, Uber also did some bad things that I don't agree with. I still think Uber has been a new positive for my life, and I'm happy they exist.
Eh. If they break laws to bust the monopolies, more power to them.
I do so love the HN culture that laws are for little people.
Uber was the little person when they started out, busting those monopolies.
They should absolutely be held to a higher standard today, now that they are more or less one of those monopolies.
One labeling is "organised crime".
Another is: civil disobedience with a profit motive.
> civil disobedience with a profit motive
That just sounds like "crime" as well. If there's a profit motive, it's not civil disobedience. I think the way Uber was run internally is more than enough evidence that the initially dubious claim of some sort of crusade to right wrongs in society can be completely dismissed.
I'm not sure if this counts as being "empowered to be more productive", but both Airbnb and Uber are (to me, at least) still miles ahead of what were the only options pre-Airbnb and pre-Uber.
The hotel experience of course was (and is) not universally bad, but I still prefer an Airbnb in most cases, for most trips I take. And when it comes to taxis... no thanks. Unless I have foreknowledge that taxis are significantly cheaper than Uber/Lyft in a place I'm visiting, I will take that Uber/Lyft every single time.
Airbnb is certainly more fraught, given the problems for communities that rampant short-term rentals can cause. And I won't claim that Uber/Lyft is fair to their drivers. But I don't really care if they had to break laws to get where they are. Sometimes laws are wrong. Sometimes laws are the result of corruption and lobbying that isn't in the interests of the actual constituents. "Social expectations" is a bit of a weird thing to bring up, since it's so amorphous and hard to pin down. I don't think I ever had any "social expectation" that people can't rent out their house or apartment for a few days or a week. I don't think I ever had any "social expectation" that the only way to hire a car was to call a number that often doesn't pick up, and then wait 30-60 minutes for a car that often doesn't ever arrive.
> And I won't claim that Uber/Lyft is fair to their drivers. But I don't really care if they had to break laws to get where they are.
"Technology and throw-caution-to-the-wind made life better for me as a consumer, and I openly don't care (much) about the negative impacts on communities and other individuals".
> Sometimes laws are wrong. Sometimes laws are the result of corruption and lobbying that isn't in the interests of the actual constituents.
Certainly. That's why we have a process to change them, rather than simply ignore them.
it was social cocaine, a lot of shiny results that made a lot of people high on numbers and progress fantasy
old is new, 2.0
> we've been throwing cash
I think you find most of the answer you want if you simply examine who "we" is in this context.
It certainly wasn't "us."
This is purely an artifact of our cultural myopia rather than a lack of unicorns. There are tens of companies hitting >$1B valuations every year.
That’s a pretty good point.
Are there any, at least somewhat credible, unicorns that have appeared over the last 5 years?
Zepto is the largest grocery delivery service in India and was YC Winter 2021, and currently is valued at $5B.
Realistically people were making these kinds of points back in 2015, and now a large percentage of the lists of unicorns were from somewhere around 2015. It just takes time for most of these companies to become well-known unicorns. The last five years is always the worst five years, until you wait another five years and in hindsight consider it a golden era.
Edit: although I do think that the couple years of high interest rates will slow the growth of startups from this era, since it has a meaningful impact on how much cash VCs can spend. The AI boom at the tail end of high interest rates will probably cover a bit of that though; OpenAI is the first runaway success but I'm pretty sure it's not going to be the last.
Thanks, that does seem like a bonafide ‘unicorn’ by any metric.
Does OpenAI count? Founded 8 years ago, but have completely blown up in the last couple years.
Ehh that’s pretty iffy, since I think they were already worth more than a billion dollars well before Oct. 2019…
It’s not that scale ruins everything, it’s the pursuit of scale that ruins everything.
I have thought a lot about antitrust recently and realized that it’s an overlapping problem with the VC unicorn problem. People get so hung up with being bigger/biggest, faster/fastest, that they minimize or ignore pathological side effects.
What if we have a progressive tax structure on business based on scale? Partly on size, partly on market power?
For example, what if corporate income tax were tied to the logarithm of the number of employees+contractors? What if the corporate income tax increased with the market share in markets served?
These kind of ideas have very low impact at small scales, but after a certain scale they start to have such a huge effect on bottom line that they disincentive growth for its own sake.
And they’re self-regulating and largely objective, unlike our current antitrust laws in the US.
A single human is a non-fungible entity, but a corporation is a wibbly-wobbly entity whose boundaries can shift at will. Any progressive tax scheme on a corporation will be immediately met with 100,000 smart accountants figuring out how to optimize against it. Expect lots of crafty maneuvering to turn one giant corporation into a thousand tiny corporations, yet somehow all under the same umbrella, all anti-competitive, and all benefitting the same original owners.
That doesn't mean we shouldn't try, but these are very difficult issues to address.
> what if corporate income tax were tied to the logarithm of the number of employees+contractors? What if the corporate income tax increased with the market share in markets served?
Is there a reason for choosing those rather than the simpler alternative of the corporate income tax rate increasing progressively with revenue (as it does for individuals)?
I dunno. I have a natural affinity for continuous vs discrete functions. But I also think thresholds cause bad behavior when you are near a threshold; you try to game the system by exceeding the threshold while trying to appear to be below it.
Corporate accountants are sophisticated enough to deal with formulae, and small businesses would be unaffected as the function changes very slowly at small numbers so even an error would likely not materially affect your return.
Calculation of market share would be more problematic.
And of course if you don’t like logarithms then choose your favorite exponential function.
Do you have revenue confused with income? VC-funded startups don’t pay income tax when they don’t have income (expenses exceed revenue).
Though, that’s less often true recently, now that they can’t expense software engineering salaries the same year.
Yes, you are right.
A funny alternative: If a company is deemed large (and stale) enough the government prints money against and purchases it. If you buy a 100 bl company you can write the 100 bl IOU no problem. Innovative departments should be split off into separate companies that start out with a good size government contract.
Government can then immediately start "mis"-managing the company to make it less profitable (while theoretical profit stays the same)
You would get for example a government google search and a government adsense department.
Large corporations would become a constellation of tiny independent companies who agree to provide goods/services in exclusive agreements with the “controlling” company.
Absolutely nothing would change except for an increase in paperwork and a few more lawyers.
>For example, what if corporate income tax were tied to the logarithm of the number of employees+contractors?
Unemployment would increase.
>What if the corporate income tax increased with the market share in markets served?
More companies would register in Panama or some other tax haven.
I would be wary of the Law of Unintended Consequences.
You're making it sound as if registering in Panama is some "gotcha" that can't also be easily closed via legislation.
Indeed. Change from corporate tax to VAT, and then no such trickery is possible (tax charged at point of sale)
Most of the US already has sales tax (it varies by State, county, and city; some have no sales tax).
VAT is a much better tax. Tax the flow of money, not the intermediate holding of money by a company.
VAT is regressive. Poor people spend a higher fraction of their income on vat-applicable goods. I'm against it on that basis.
Not all goods are VAT-qualified for that reason. We have that safety valve already.
That sounds a bit like "VAT can't be too bad because we can just not apply it", which I don't find convincing.
I agree that it's an easy tax to collect, and I think that's very important.
I fundamentally disagree with the grandparent that holds that we should tax flow rather than holding. That's a handbrake on activity. But I suspect we won't reach agreement as it's a question of personal values. If you think that billionaires are great and we need more of them, then I can see how you'd be in favour of vat.
Uh, I doubt it.
At the companies that would be affected, they would simply divest. Shareholders would not tolerate the destruction of value so new companies would be created, spinning off parts of the original company (products and employees) into new companies.
In fact employment might increase as these new companies would need administrative functions that were previously shared in the larger original company (HR, accounting, etc)
Comical to suggest that AirBnB "ruined communities" or "destroyed the dream of home ownership" as if decades of federal, state, and local government policy had not already guaranteed those outcomes.
Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people: those who would already be buying at the limits of their budgets to stay where they were brought up.
This happened even in areas where holiday home ownership and rental was common as a business.
The failure of government to grapple with the negative effects of Airbnb is a separate thing. Airbnb are, in fact, in control of their own morality.
As a home owner that was only able to afford to buy a house because we were able to rent out the spare rooms on AirBnb I find fault in your logic.
I think you'll find that zoning/planning permission is the real bad guy here. That and a failure to understand Adam Smith and implement the ideas of Henry George.
> because we were able to rent out the spare rooms on AirBnb
Unless you were the very first person in the entire area to think to do so, then the existence of that very market for you to rent spare rooms on is actually driving up the prices of properties so you have to do so.
It's also driving up the prices of long term rental, because landlords make more money in the short-term rental market. The prices of long-term rental also affect the floor price of permanent ownership.
I have friends and family. From time to time I would like to host them when they visit so we can drink alcohol and stay up late.
Consequently it is always likely that one might want at least one more room than is needed by the family. It additionally provides buffer overflow should the pitter-patter of tiny drains on one's resources appear.
In such circumstances renting out a spare room on a longish licence should necessarily reduce rents since now there is an option which is likely to be cheaper. Renting out a spare room for other people visiting ones city should similarly have had a depressive impact on the price of hotels or an improvement in their offering.
Given the inconvenience and reduced amenity one gains from living in a house under multiple occupation there is further no specific reason why it should be the case that this does not more than offset the cash remuneration meaning there is no in principle reason why the capital cost of such a property should increase.
Yours is not a common case. That was the original dream of AirBNB and the appeal of staying with a family in some far away place made it cool.
The vast majority of AirBNBs are the entire house or some separate guest cottage. Many are owned and managed by larger companies. Or by people who own multiple houses.
The individual home owner renting out a room so they can cover their mortgage has become more of an outlier.
I agree with your statements but believe the solution to be the abolition, or substantial reduction, of planning controls and the introduction of a Georgist Land Tax.
Airbnb demonstrates that there was clearly substantial demand for "house style" hotel rooms but hotels chose not to provide them. In most hotels where a room is $400 a suite with a space to work, watch tv and cook, might be $10,000. The hotel market optimised for the business man travelling alone to conferences and paid a price for it. Even my favourite hotel on earth does not provide an "ordinary menu" for the nights where you just want to curl up with your loved one and watch a film - it's Michelin star dining or bust.
In most hotels the only amenity that a hotel offers that is "better" than the home experience is a swimming pool and daily housekeeping.
Who, but the richest amongst us, has their bed linen changed _every day_?
If hotels had been built as apartments with no zoning restrictions arbitrarily placed upon them there would have been an option for the hotels to adapt by offering their rooms up on a long lease.
> As a home owner that was only able to afford to buy a house because we were able to rent out the spare rooms on AirBnb I find fault in your logic.
Then you're a landlord who has purchased more of a scarce resource than they require (a house larger than you need) who has then turned around and rented access to the extra you have to people who can't afford a home of their own, and in so doing have driven the cost of homeowner-ship just slightly higher, which was the reason you couldn't afford it in the first place. Repeat that a few thousand times and that's a huge contributing factor to why housing is in such a dire state here.
You haven't solved anything. You just went from being an exploited person to being an exploiter instead, taking advantage of people you should have solidarity with and inflicting the harm the system was inflicting on you, onto them instead. The system will continue feasting on people who can't manage the same as you did, and you now posses wealth you did not earn.
Homes on the market aren't infinitely customizable. It seems perfectly likely that GP would have been happy to buy a home with exactly the amount of space they needed, but such a home was not available at a price they could pay. (Maybe they settled for a slightly less-nice neighborhood, or a slightly less-nice house, that just happened to provide an extra room or two.)
Even if that wasn't the case, I don't see a problem with buying slightly larger than is necessary, because (for example) perhaps they're planning to have a couple kids in the next few years, but will rent out the extra space until then. Moving is transactionally expensive, and expecting someone to move every few years as their space needs change is unreasonable.
Regardless, you seem a bit overly judgmental about this entire situation, and about someone you don't know at all.
You need to really distinguish between rent seeking landowners, and value add landowners.
Landowners that have made improvements to the land and seek financial compensation for those improvements, in this case in the form of providing a service, is NOT rent seeking behavior.
That is NOT exploitation.
This is even basic economics from an extremely leftist POV, where those that have added labor value, that is improvements to the land, in this case providing a service and perhaps building a unit, managing them, etc. should be compensated for their labor.
Like this is extremely basic stuff.
> You need to really distinguish between rent seeking landowners, and value add landowners.
No, I don't. Rent-seeking is derided behavior by basically everyone who isn't rent-seeking.
If you buy property, improve it, and sell it, there's your profit for providing that service. No ethical lapse whatsoever, unless you used that godawful gray laminate that every flipper uses. Then I'm mad at you still but that's a different reason.
If you own a thing that people need, and you gate access to it behind a paywall while maintaining ownership, and extract value from those people so they may use it but retain full ownership and control of it, that's rent-seeking and it sucks. You're the economic version of wind drag.
Yes, that includes the 98 year old lady who rents out a room to fill the gaps left by social security to the nice young man who's going to college in the area. Still value extraction. That young man is losing the value of his labor because he has to live somewhere and she has space he can live in. That's unethical.
Sorry, what's your position here - that any renting of a property is an "economic rent" and thus immoral? That makes little sense to me. I am a renter and glad to be so because I'm not confident I want to live in my current home for the 5-10 years it takes for purchasing it to be worthwhile. The landlord is providing me a service, turning a big, illiquid asset into something that can be accessed with only a 1-year time commitment. This is economically productive (allows me to live somewhere I otherwise wouldn't) and is hence not an "economic rent".
The classic example of an economic rent is a feudal lord putting a chain across a river and charging a toll. This is economically unproductive because it's just putting a price on something that was free (and, you have to assume for the example, non-rivalrous). This is why the sibling comment points out that the rent-seekers in the housing market are more like the people seeking to constrain supply via zoning and regulation.
> Rent-seeking is derided behavior by basically everyone who isn't rent-seeking.
Rent-seeking is something specific. If we can't get that right we're not going to get far into the discussion. Not all rents are the same.
Hotels rent rooms. But they are not the same as rent seeking.
If you're not creating new wealth/value add, and instead exploit rents by mere virtue of owning, then it is rent-seeking. If you're adding value, like providing a service or other additions, then no it's not rent seeking. The 98 year old lady? Probably rent seeking. The couple doing AirBnB? Probably not.
Why?
AirBnBs, like hotels, tend to provide a genuine service that adds value. The listings are in a competitive market, where people need to improve the living spaces in order for them to get rented out. This doesn't take into account the various hospitality businesses that have emerged in various rural communities because of AirBnB. It's an entire industry.
That is Hotels/Hospitality businesses are NOT rent seeking just because they rent out rooms or provide services on land they own.
Who is Rent-Seeking?
The people preventing new housing/infrastructure from being built are the ones rent-seeking. They artificially manipulate market conditions by restricting supply, driving up land value, and thereby generate unearned income. Income that isn't from productive improvements on land but from mere ownership of land. That unearned income on land is rent-seeking behavior.
> godawful gray laminate
dude! godawful gray granite or go home :)
People have desires that go beyond their needs, and so long as they have money they will spend it to satisfy them.
If we, as a society, took this into account we would make it easier to build more housing.
The fact that we don't is the moral, ethical, and economic tragedy of our age.
AirBnB destroyed home ownership?
As far as I can remember AirBnB didn't cause the 2008 financial disaster that really sealed the fate of homeownership in America for the next decade for a lot of Americans.
AirBnB has provided an avenue to generate income for small business owners in rural communities. Urban areas are struggling because they aren't building more.
BUILD MORE. How difficult is it to understand that?
> AirBnB destroyed home ownership?
What I said was rather more specifically qualified than that.
> Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people: those who would already be buying at the limits of their budgets to stay where they were brought up.
The thing that's "ruined communities and destroyed the dream of home ownership" is the incapacity of the community, "where they were brought up", to actually change and accommodate increasing demands.
In reality these individuals from these communities are using Left rhetoric to advocate an extremely conservative position. That is for the community to remain as is, in the exact way such people were "brought up", such that no progress, no change, no additional value is added to the communities.
What ends up happening because of this confused policy is that the individuals in these communities both lose out on their hometown, the community ends up changing, and it becomes impossibly expensive for everyone in the community. IE the worst of all options.
Instead. Build more. Build vertically. Build better infrastructure. Provide for local residents an opportunity to "buy-in".
This kind of cloaked conservatism, masquerading itself using leftist rhetoric ends up being confused from a policy POV.
Lots of assumptions buried in here.
There are rural/tourist-dependent communities that had an adequate supply of housing when the only visitor accomodation was licensed as a hotel/motel/inn/B&B/hostel. They didn't need a lot of extra, but some slack to accomodate tourist season workers, and occasional new arrivals.
Then AirBnB came along and converted not just the slack, but some residential property that would otherwise have been available for long term lease, into much more profitable short term rentals.
Income at licensed residential stays sometimes drops; short term and long term housing options either vanish or are reduced; problems begin to occur that were not present before.
None of this is in any way dependent on the failures caused by zoning, permitting and housing policy.
This story has been repeated at tourist locations across the world.
AirBnB was fundamentally a message to anyone with residential property: you can make more money with it as a short term rental than via any other use. This is why in many locations we've seen new construction of residential property intended solely for short term rentals. Nobody wanted to build that stuff when it was only going to be LTR; AirBnB changed the game.
You and GP are talking past each other a bit, because they're speaking to the general case, whilst you're narrowing it to tourist-dependent areas. I grew up in a tourist region, and it's been ruined (from the point of view of those of us who are from there, and might have wanted to stick around) exactly as you say.
The complicating factor (which they miss) for a tourist region is that if your "product" is (in part) Small Town Charm, or Rural Character, then you can't build, baby, build without destroying the economic underpinning of the entire community. I wish my hometown had allowed for more hotels (like, decades ago - they were horribly regulator-captured for ages), and had the wisdom to restrict STR before it became such a thing.
For anywhere with a non-tourism based economy, however, I think they are correct: increasing supply is the only possible solution.
It only occurs to me upon writing this that areas without any existing tourist infrastructure are becoming tourist-dependent on the basis of STR, which might be the worst of both worlds. Those places need to allow hotels and (actual) B&Bs, before they ruin their communities through STR-tourist dependence.
The 2008 financial disaster, in particular speaking of home ownership issues was mostly limited to the USA though.
Americas are a lot bigger than the USA, and the unicorns had a disruptive effect wider still.
You need to explain why AirBnB did this as opposed to other factors. Renting your house out predates AirBnB.
I need to?
Thanks for the unnecessary correction, when it's pretty clear that my comment you are replying to includes the words "even in areas where holiday home ownership and rental was common as a business".
I don't know why it did not happen before.
All I know is that the situation in coastal resort towns in Cornwall, Devon, and elsewhere in the UK changed utterly when Airbnb became a thing.
I could guess that barrier to entry was always an issue before then; the relative complexity and process involved in listing a property with e.g. Hoseasons, who were the dominant player in the 80s and 90s, and who inspected properties and had greater requirements.
But either way, Airbnb did unambiguously change things. Ask people who lived in Cornish towns whether they're even able to rent a room or a flat.
I mean, usually if thing popular, make more of thing until everyone can have it? I guess we could go with your solution of deliberately killing demand with bizarre mechanisms so only a few people can enjoy a holiday instead of pointing the blame where it demands: locals fighting tooth and nail to not build more.
Nimbys are basically hukou advocates in disguise. After all, it's the only solution if you don't primarily place the blame on lack of construction.
> make more of thing until everyone can have it?
There are literal physical limits on this in many coastal villages and towns -- for example pick almost anywhere on the south west coast of the UK. Not only is the area on which houses can be built restrictive due to geography (and often geology), the transport infrastructure does not scale. New property building both has not caught up with, and probably cannot catch up with, short term demand.
As it happens, a collapse seems likely, because local sentiment is turning against them so fast and because of general economic weakness; the number of "thriving holiday let" properties that are on the market now suggests that Airbnb's own accelerating rental costs problem is going to cause a bit of a bust.
But that bust will not benefit most of the people in the areas affected where the price of a small house is twenty to thirty times the average salary of would-be-first-time-buyers. Those people are leaving, so there will instead be a ghost town. And the sheer number of residents who are temporary has destroyed the potential for long-term stable infrastructure businesses for residents.
> Nimbys are basically hukou advocates in disguise.
It's nothing to do with nimbyism, is it? Nimbys are property owners. The problem only affects people who do not have back yards. They can no longer afford the houses at the prices at which they will be built and the rates at which they can be.
> It's nothing to do with nimbyism, is it? Nimbys are property owners. The problem only affects people who do not have back yards.
NIMBYs are property owners who vote for restrictive housing development policy in order to prop up their own home values.
Eliminate the NIMBYs and you end up with a lot more people who can have their own backyard.
>Eliminate the NIMBYs
This is said rather matter-of-factly, but how do you propose doing that in a society with democratic values (ie people get a voice in their governance) and also where 70% of most household wealth is in their property?
Japan does this just fine: they have standardized zoning across all municipalities, decided at the national level.
What percent of Japanese household net worth is in their primary residence and how much has this been impacted by their largely stagnant stock market for the last 40 years?
I'm skeptical that national zoning is feasible if for no other reason than the diversity of land and land uses.
Are you arguing for affordability? You can't have both affordability and high price (= huge % of net worth).
It's a very bad thing for people to invest in a fundamentally depreciating asset and expect a return, there's literally no other way to get a return then besides inflation.
And sure, returns have been low, but that's because the real interest rate in Japan for the last 30 years has been negative! You can't get a return if the fundamental balance of loanable funds leads to a negative real interest rate, you need stimulus instead, which they've been trying for over thirty years! And shocker, now that we're seeing Japanese interest rates rise, Japanese stocks are shooting up!
I'm trying to get clarity on this statement:
>Japan does this just fine
You seem to be implying Japan's scenario adequately mirrors the U.S. In other words, they have a high proportion of their net worth tied up in real estate, which is what I am pointing to as a driver of NIMBY-ism. If that analogy doesn't hold, then I would argue it's not an apt analogy and probably doesn't offer much in terms of policy insight.
Also, in the US, I don't think you can argue that real estate in general is a "fundamentally depreciating" asset. I don't think the recent history is illustrative, but over the long term real estate tends to be positive.
Real estate is fundamentally depreciating: you build a building, it exhibits wear and tear, it's worth nothing in the long run. Assets are usually valued off of future cashflows, which would be the long-run rent it can fetch. For most investments, you just shove this into a calculator with the current risk free rate and it spits out a number that's the current price. The rent declines in the case of a building with the wear until it's condemned, at which point it goes to zero. I'm saying this because just because something is fundamentally depreciating doesn't mean it won't have real yields, my point is looking at the yields from a capital appreciation perspective is kinda distracting where fundamental yields come from. Usually, capital appreciation is far more muddled (did capital become cheaper, leading to bidding up of yields? did people secularly just want to pay more for renting a house? etc)
Of course in the US there's been huge capital appreciation: housing and shelter went from 10% of CPI in the 60s to 40% of CPI today! Are you going to keep drawing the line and say "yeah, it's totally reasonable for us to continue it to have capital appreciation out-of-line of actual yields when supply and demand are balanced" - like how far is enough for you? 50% of CPI? 60? You're never going to be able to get the real appreciation that we've had over the last 40 years because that'd take us to 160% of CPI!!!
You understand that a real estate asset is not just the building, right? The land is what typically appreciates in value (maybe the building depending on labor/material costs). I've also already pointed out that recent history is anomalous in terms of property appreciation. Still historical averages are generally positive.
Regardless, all of that is a digression from the original question: does Japan have a similar dynamic where the bulk of household net worth is tied up in real estate? That's central to my claim that people are more protective of the assets tied to their wealth. In other words, we need to be careful about thinking Japan provides an example if there is a different wealth dynamic. It seems like you are trying to have a different conversation.
Don't have to be property owners. Anyone who can show up at a meeting, vote, submit comments ...
Sure, and anyone can make their own crypto implementation that's not based on reference, but what matters isn't the theory but the actual facts: the overwhelming majority of community meeting retirees are retired homeowners.
Look at your local suburban school district's bond: you'll probably see some age-based exemption on paying to get support because old people are by far the most engaged. Is that democratic? In the sense that its based on votes of a voluntary electorate, yes. Is it the representative will? Clearly not! You want to cluster elections around high turnout to maximize representation.
Anyone can, but existing property owners do.
AirBnB did 'eliminate' the NIMBYs by sidestepping local zoning laws.
And the outcome was bad for people living in these targets for mass tourism. Unless they were a YIMBY of course and wanted a hostel in their backyard.
'NIMBY' is like 'Karen' or 'boomer'. Some sort of convenient scapegoat, deserving or not.
I could turn around and say "the outcome was bad for people willing to receive all of the benefits of a free-to-travel society in a bustling town but none of the costs." Of course if you say "mass tourism" it's bad, but idk, do you like to travel? If hundreds of thousands want to visit a beautiful town, should we limit supply in a way that makes it impossible for them to visit? There are millions of alternatives (you could ban lyft or cars for non-natives, you could restrict development to a resort and gated community on one part of town, etc) but the whole reason it's called NIMBY is because the only alternative NIMBYs have is freezing a town in amber while claiming a triple lock raise in pensions.
Zoning laws are, for the most part, a mistake. Any solution to housing prices that isn't a boost in supply either leads to scarcity or hideous Danwei-style planning that reaches into peoples life plans and the ability to afford a future.
Please answer the solution to people not being able to afford back yards. Price is a clearing indicator on supply and demand: you can either crush demand or boost supply. If nimbys block supply increases, you either have to pick people to kick out or forbid other people from moving in.
Where do you think the AirBNBs came from? Some people decided to move out, and the people that moved in decided that others would get better use experiencing the property part-time as reflected in market prices. Would you ban them from making this choice? Would you screen every buyer not based on their own assessed price but on ever so shifting "intent"? Would you make the intent they declare at the start binding?
EDIT: I'll bet you $100 to your charity of choice that physical constraints aren't binding in the case you're thinking of (this could be shown by, despite a lax / encouraging planning environment, no one building anything).
There are many factors, and Abnb can be one of them, but it’s not the only read. Zoning laws, economic landscape of the town, etc all play into to the lack of affordable housing. I would posit NIMBYism and zoning are likely the biggest ones.
AirBnB rentals are not making it criminal to build supply, local zoning regulations that benefit incumbents at the expense of everyone else are what make it criminal to build supply.
It's a defect at the intersection of capitalism, property ownership, and democracy.
What do you think would happen if you filled a cozy touristic town with skyscrapers?
Who is building skyscrapers in a cozy tourist town? Do you really think zoning laws are the only thing standing between tiny towns and a bustling metropolis?
If there is strong demand for housing, you might see bungalows turn into town homes or townhomes turn into mixed use 3 story flats... Which tend to be much more economically productive for the local gov anyways because the cost of infrastructure & services per person drops.
If there were no rules some people would build as much as they could, so long as it stayed profitable
Some zoning rules are worse, some better, but without rules at all many places would get ruined quickly
Maybe not skyscrapers but very high tourism rental apartment buildings.
You can look at the Belgian coast for an example of this enshitification of coastal real estate.
> Airbnb has in fact ruined communities and destroyed the dream of home ownership for an entire class of people
That is fair, but also misses the point. The issue with AirBnB is not that they are evil company and must be regulated. It's that they operate in a system where housing is an investment vehicle due to artificially constrained supply and tax system that is riddled with well intentioned and widely abused property ownership cuts. At worst they have accelerated the issue rather than caused it.
> Airbnb are, in fact, in control of their own morality.
Not entirely, they are a publicly listed company and will get sued if they do anything that will hurt the stock price.
Honestly I'm not convinced when an airbnb is cheaper to me than renting some other place. It even includes furniture!
Speaking of, at some point even middle class families could afford to live in a hotel year long. Are these days coming back ? What happened for that to become uneconomical for a while ? (Is it a symptom of the middle class getting much smaller ?)
Oh please. NIMBYs ruined home ownership. Airbnb certainly hasn't had zero contribution to higher home prices, but abolishing short-term rentals hasn't fixed affordability issues anywhere it's been done.
As an aside, I own a home and now merely dream that renting should be as cheap as owning. Having equity in something that needs constant repair, loses heat on all sides, and has a bunch of fucking grass around it, is only equivalent to a certain amount of cash.
I suspect the real reason owning is cheap is not that it's inherently better, but because everything is cheaper when you have lots of money.
When I read stuff like this, I'm left wondering if I'm the only person who actually lives in a place that has been infested with Airbnb. On paper, my neighborhood is the Hacker News dreamland. Nobody has a yard. There is train service. Many people don't have cars. There is no mandatory parking allowance. There is no zoning restriction against multifamily housing. Virtually every unit is at least attached. Multi-use is fine. Plenty of buildings contain both housing and businesses. There isn't a lot of traffic. It's walkable. The only major restriction is you can't build higher than five stories. And we've been in a construction boom for nearly a decade.
But much of that boom has been tearing down multifamily apartment complexes and replacing them with luxury townhouses and condos instead. Almost nobody is actually moving into those places. They're 90% being purchased by investors, mostly out of state investors, to be used as Airbnbs. There is a significant categorical difference between investment property today and investment property before Airbnb. Before Airbnb, you rented via long-term leases, or you bought hotels and apartments in really shitty neighborhoods to use as weekly or even daily rentals for homeless people with jobs. Now you can buy as little as a single unit and the infrastructure to rent it out daily as a hotel room to much wealthier travelers exists without you needing to do anything extra.
With predictable results. Even in neighorhoods with little to no zoning restrictions, with virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
That should drive your property value down, not up.
This is a short-sighted and simplistic analysis of how land value works. I'm in a terrific location. Walking distance from the Texas State Fair and Cotton Bowl. Walking distance from Deep Ellum with all of its hip clubs and restaurants. Walking distance from downtown. Walking distance to the Dallas Convention Center. You can get to the Longhorn Ballroom, Southside Ballroom, and American Airlines Center in under ten minutes.
The only downside for buyers of the past? It was a poor neighborhood. All of those multifamily apartment complexes being torn down were full of poor people, mostly dark-skinned, many of them non-English speaking. Now that their landlords spent the past 15 years doing zero maintenance until they could get the buildings condemned and force all of the tenants out without needing to have grounds for eviction, they can sell the land, and it doesn't make any difference if the experience of actually living here gets shitty because of all the parties and not having any neighbors. The buyers don't care because the buyers don't actually live here. The single-night renters don't care because they don't live here, either.
I did not hear a complaint about what it was doing to their property values. I did hear:
> virtually nonstop construction of new housing, almost nobody lives here, the neighborhood is completely hollowed out, and all of these new luxury homes are mostly party houses used by rich college students and bachelorette parties.
Not until there are so many short-term rentals that they aren't profitable anymore
I thought the original idea of Airbnb was to open a spare room in the house you already own to guests. I've used it only in this way and it really helped with a financial crunch, and given that I lived there and was present while guests where there, there was no negative impact to the community at all. I know people have been buying houses just for Airbnb rental, but that's not everyone.
AirBnB has been shown to raise residential house prices.
It’s not the only factor, or even the biggest, but still…
> It’s not the only factor, or even the biggest, but still…
But that's the key, really. In most places, banning short-term rentals will not move the needle on housing affordability.
It's like trying to optimize the thing that's causing 3% of the slowdown when things that are responsible for 40%, 30%, and 25% are right there, staring you in the face.
But getting rid of it doesn't lower them or even slow the increase.
https://medium.com/chamber-of-progress/new-nyc-data-shows-th...
I live in Lisbon. Over 80% of housing units in the historic Alfama neighborhood are now vacation rentals. This is the most historically Portuguese neighborhood in the capital. It was the only neighborhood to survive the earthquake in 1755. Fado was born there.
Yes, it's a failure of government policy, but I don't think it's hyperbole to say that AirBnB and its ilk destroyed that community. That is, assuming you define "community" as a group of people and not a group of buildings.
If anything, there is a housing cartel that we need an Uber-like blitz (times a million) to destroy. In the same way that Uber ignored local taxi regulations, you would need to ignore local zoning regulations. Just "build, baby, build", become valuable, and then, with your fait-accompli in hand, bribe the various local governments -- just like Uber.
Except -- if it took the combined might of Uber's VCs, and the disposable human battering ram that was Travis Kalanick, just to disrupt the puny little taxi industry, imagine what it would take to change housing. Ain't never gonna happen.
> Comical to suggest that AirBnB "ruined communities"
it has absolutely done so in the same way that a bunch of motels springing up in your neighborhood would completely change it and not necessarily for the better
it also greatly constrained the availability of housing for locals, therefore pushing up prices, so that people not living in the city could visit for cheaper; probably ok if you're in the tourism business, otherwise not
Sure, but if someone started running heavy industrial concrete equipment in a residential zoned block 24/7, than the city wouldn't be blaming poor people for the issues.
The fact is you can go to travel websites, and the first 70k listings in some cities are for commercial hotel/share services running out of residential zoned homes.
Low-income people are easier to squeeze, and "with a computer" convenience doesn't make it an ethical securitization model. =3
Yeah I'm tired of this too. Real estate hyperinflation is almost entirely the fault of chronically under-building real estate due to regulatory capture by landlords, legacy homeowners, and speculators. The real estate market is more or less a cartel in quite a few places.
AirBnB is a small factor. I suppose it drives up prices, but only because supply is so absurdly tight.
100% of code uses 100% of resources. Let's not downplay the role of Airbnb as both a company and a phenomena for causing inflation. But more than that, remember that a lot happens at the margins in these markets: what's actually liquid or in play is a small part of the overall stock. So anything that messes with that will have an outsized effect.
You can define it as under-building, but that's only one side of the political effect. E.g. the UK net immigration rate has been pretty enormous, and it seems lopsided to call it under-building to have not built homes for a giant number of people coming from their previous homes elsewhere in the world to the UK.
Speaking as the son of an immigrant, married to an immigrant, for the people who can only think tribally, and must assume I am doing the same.
Underutilization of land as a result on speculation on the growth of land prices is a major reason, even Manhattan has massive chunks of real estate that are vacant, a land value tax would fix this.
That's an effect of massive demand, not a cause (or not a first-order cause). If you know (and vote for) loads more demand is coming the more you wait, you will wait. If demand were more limited to natural population growth levels, there'd be no point waiting.
most of these are legal immigrants, so the country decided to accept them, and yet failed to build enough to keep up with demand that they allowed.
I agree that both things are caused by one level or government or another. I'm just saying that under building is not the only explanation. It's probably not even the most natural one. It's maybe a second or effect once you've decided to admit multiple cities' worth of people each year.
Curious, what happened to their previous homes ? Did they become Airbnb rentals on the cheap too by any chance ?
That would be an odd thing to assume. Net immigration has long predated AirBnB.
Obviously I wonder about post-AirBnB migrants... or maybe also can we see changes in the source countries between pre- and post- ?
Uber & Airbnb were really exploring a time-honoured model that has predictable effects. Taking underutilized resources and shifting to a "rental" model increases utilization of assets, broadening accessibility, and thereby increasing wealth... while simultaneously increasing the value of the underlying asset (making it less affordable). This isn't a new thing, or a surprising thing, nor is the scale of it the problem.
Where we get into a problem is when, due to lack of competition, you start extracting almost all (or perhaps even somewhat more than all) of the value that you're adding. That leaves everyone else in the same boat they were in before the rental model showed up, except comparatively worse off because there's a ton of wealth in there that has been concentrated in the hands of a few.
This is the kind of thing that having more competition would help with.
One of the questions all this raises for me is: what fraction of successful startups actually make society better?
I'm sure to get pushback here, but my suspicion is: most do not. Looking at companies like Facebook, Amazon, or Google, I'm kind of think they made it worse. Yeah, I know, some people benefited. But net-net, I preferred having more and better bookstores to Amazon. I don't like what google has become at all. And Facebook has never been good.
I think those companies increased efficiency, which in general makes things better as long as there is sufficient competition in their markets... Sadly governments have failed in stopping them from hovering up startups and like. So now they in many cases have too much power.
Google helps us lookup anything we want
Amazon helps us buy anything we want
Facebook helps us keep in touch with all of our friends easily
Their not as good a they used to be but how are they not good?
Google provided a useful lookup service at the expense of brainwashing society with consumerist propaganda and the complete destruction of personal privacy and the normalization of the surveillance state. It wasn't worth it.
Amazon inspired us to think we needed more cheap crap in order to inspire us to buy cheap crap that we didn't need. We aren't any happier than we were before we had the ability to buy cheap crap on a whim, but we sure do have a lot more cheap crap than before. That wasn't worth it.
Facebook is essentially as good at helping people keep in touch as any instant messenger that preceded it. But unlike those instant messengers, it's supported by invasive targeted ads, and consult the first paragraph for why this is a negative.
This has all been a waste. Society isn't any better as a result of these companies existing.
Google built a profit model on the original organic internet while facilitating that web's replacement with today's wonderful SEOable 'content'.
Google & Facebook push the advertising/attention economy business model, which rewards spreading misinformation & extreme viewpoints, leading to the rise in conspiracy theories and breakdown in discourse & trust in public institutions we see today. Amazon has killed a lot of local retail, removing OK jobs and replacing them with low-paying/low-skill warehouse labor.
I think there's arguments for both sides, but personally I land on the net-evil side for all 3 of the listed companies.
Actually, it's more like the pursuit of large profits (and VC exits) through scaling ruins everything.
And the way publicly traded companies are so beholden to shareholders.
What, have a profitable, efficient business with happy customers and workers? Well, we NEED to see growth, so better find a way to cut the operating costs - no matter how much worse it makes the product, how unhappy the workers are, etc. Better try to capture more of the market even if it makes 0 sense in context and will end up being a massive waste of resources.
It may run the business into the ground, but as long as there's a quarter of growth they can't see anything else.
I'm halfway through reading this and still not discovered what the point is.
Startups and incubators are actually ruining everything while telling everyone they're improving everything.
I think it's kinda true, but govt regulations should have prevented it, which is not happening anytime soon because politicians act like startups and lobbies act like incubators.
I like Airbnb, because it's made staying abroad much cheaper and nicer. I also like being able to rent a taxi on an app in a new town.
For awhile I'd been using AirBnb by reflex, but after a few pretty bad experiences I started indexing it against local hotels before committing, and my experience has been that if you just need a place to be (don't care about kitchen) then AirBnB is not nearly as competitive as it used to be. So yes, AirBnB has made staying places cheaper, but the industry is also catching up. Concrete example is nightly rate for a studio in Paris vs the hotel next to it were +/- euros difference when I was there last year.
I agree and have had similar experiences. But note that the fact hotels have got cheaper/better is also part of AirBnB's influence. Competition makes incumbents up their game.
"Cheaper" is questionable. I usually find that, after fees, I'm paying the same, or more, than I'd pay at a nicer Comfort Inn.
Maybe I'm just unlucky but the last several times I've traveled, staying at an AirBnB simply made no financial sense. Sometimes I feel like I'm crazy, hearing people talk about "cheaper".
Comfort Inn is in the lower middle of hotel levels. Not roach infested, not tiny, but also not very luxury. It is about the cheapest hotel I'll let my family stay in. The rooms work, but they are tiny and everyone stays in the same room. For a similar price I find airBnB which has separate bedrooms for us and each kid, a full kitchen (this saves us a ton of money vs restaurants and is healthier), and generally some other rooms to play in. We don't (rarely) get a pool which the kids miss, but overall it is a much better value. I agree the price is similar though.
I don't like using AirBNB, for all the usual reasons, but every time I travel it's no comparison. To Vancouver a couple years ago, it would be like $400-500/night for a decent hotel in the area I wanted to stay. The apartment we ended up renting through AirBNB was I think $150/night, and that included a fully stocked kitchen & in unit washer/dryer. Similar prices for a trip to San Francisco earlier this year. I don't like the societal effects, but it is massively cheaper for much better service.
That was true like 5+ years ago. By now market prices of housing have gone up to match the tourism profit lure I guess. It seems common nowadays for the owner to own multiple apartments, like 8+, where as in the beginning it was one or two.
I prefer ordinary hotels nowadays. Especially when travelling with children.
Airbnb is great until there is an issue and then it is a nightmare.
I think it will be like Amazons coming doom, death by a thousand cuts. You can have this horrible model that can't handle edge cases and until you burn too many people, it seems to work. But once you have sold fakes, or ruined (or added thousands in expense) vacations to enough people I know, your business is dead to me.
I’ve been thinking a lot about this. There seems to be an “optimal” scale for tech — Google used to be amazing and wonderful about a decade ago, until it reached a certain scale. So were Facebook, etc. And even the positive effects of darling unicorns like Uber and Airbnb are actually more in the business model they pioneered, rather than the app itself. In Eastern Europe I use Uber alternatives which are usually about as good as Uber or better. Only Airbnb is a “naturally” global company by its very nature, because it is for travel.
Maybe the natural limit to scale should be state sovereignty (i.e. protectionism). I actually believe that consumers benefit if countries ban or tax the likes of Uber and promote a homegrown alternative. (Imagine if each country had its own Google customized to the local language and culture, it might actually be a better experience for everyone). I’ve heard that Baidu and Yandex are better than Google for local content.
Too bad the EU didn’t catch on with this. Europe could’ve outcompeted the US by playing a different game on quality and boutique charm instead of scale. Instead of pathetically trying to become a large homogeneous market like the US (and then failing badly and then regulating “privacy” out of spite), the EU should’ve actually been protectionist in favor of its members and it would’ve been interesting to see what marvels could originate.
I misread the title as "Scala Ruins Everything" and was very confused by the comments.
So did I and having chosen it once, I still thought "well, I'll hear this out..."
> Those were the innocuous founding ideas behind DoorDash, AirBnB, Uber, and Facebook. At scale, they would ruin communities, put restaurants out of business, destroy the dream of home ownership, and eventually undermine democracy itself.
Impossible to assess. These things happened, but as a chemistry experiment. You'd need to be some sort of $Diety to track the individiual atoms in the solution and judge the alternatives.
Quit this fruitlessness while you're behind, say I.
> The bump in interest rates has cooled things down
This is the actual issue. When ZIRP was introduced (and then RE-introduced, sigh), it makes money appear to be worth almost nothing. Which means everything looks valuable.
> "society-bending hyper growth"
i like that phrase. Like black holes' hyper-gravity bending the fabric of space-time..
the article also reminds me of that book "The Limits to Growth" (from the 70ies?)..
To be honest, you could say this about capitalism in general. Everything has to be huge no matter what industry it's in or what the product is, just because shareholders demand that impossible infinite growth.
I think this could largely be an issue with public or VC/PE funded companies. There's plenty of private companies of small/mid size that make plenty of money but don't feel a need to grow excessively. You could think of the local plumbing company, or a small boutique consulting firm. They want to grow, but there's a natural barrier that's hard to cross without becoming a very large company and changing the nature of the company that the owner may be enjoying.
I have always wondered how that would apply to software companies though. If you make something that works really well and everyone wants to buy it, you could grow fairly large financially without needing a ton of people if you just focus on that one program that makes you successful. I imagine it's hard to not feel a need to scale up dramatically when you have millions of users/customers asking for new features.
Valve Corporation is one of such private companies, mostly known these days for its Steam game updates and store platform.
Being private didn't prevent it turning into a monopsony, ironically for the discussion, maybe because its competitors were mostly public companies (and so didn't care enough to do a good job) ?
They are not immune to walled garden issues though (SteamWorks), but maybe their private structure helped enshittification to proceed much slower ?
Human nature in most big culture seems to be trained to demand more (even if not always money). If there was any group of people that were "content with what they had", they were outpaced in development by the ones that "want more" so there will be minor (or inexistent) now.
I do wonder if there is any smart solution to this issue.
Good observation.
The answer is at the beginning of your statement: "human nature".
In plain English: there's no solution to that.
Bad observation.
Stop projecting, you two.
Just because you want to take take take from others doesn't mean everyone else is.
Your comment is quite confusing.
The observation is that the "take take take" behavior arises out of a sort of survival-of-the-fittest mechanism. Both preceding comments seem to lament this, rather than relate to it.
Right.
The gp made something up, the second comment affirmed it
I'm calling bs
Because I am human and they are lying on my humanity
Y'all are welcome to disagree with me on it
It's not about you. It's about another "type" of human. One that wants more. Maybe you don't (good for you, probably you are happier!). But the problem is you will need to "fight" against the other "type". What do you (personally) do then to prevent the other "type" grabbing more? Whatever other people like you tried during history (hundreds of years ago) seems not to have worked (the grabbing types are still grabbing in all culture I have sufficient knowledge of to comment on).
It's not capitalism. It's government bonds. If you can get a guaranteed return from bonds, then any risk must beat the bond market. That increases the cost of capital for businesses, so they have to produce greater returns.
Any advance, early industrial revolution; late nineteenth century industrialization; twentieth century vertical integration; globalization; internet disintermediation etc. will cause some dislocation. Often unintended, and rarely foreseen. Ultimately it all settles down to a new equilibrium, until the next perturbation. It's a bit disingenuous blaming VC's, or scale, or anything exogenous. The system's capacity for change will always outstrip the current institutions' abilities to fully buffer the change. If we focused on improving the institutions responsible for that function we'd be performing a more useful function than trying to limit the change.
Odd piece. It highlights some hyper-scalers but it needs to work on justifying 'how they ruin everything'.
"At scale, they would ruin communities, put restaurants out of business, destroy the dream of home ownership, and eventually undermine democracy itself."
Uh what now?
airbnb, doordash, airbnb, facebook - did those things, respectively, with plenty of hard evidence (does anyone still remember cambridge analytica)
Ok let's look at "destroying the dream of homeownership" since that the most objective.
Homeownership rates are almost 66% now in 2024 [1], which is the highest it's been since 2011 [2].
[1] https://www.bankrate.com/homeownership/home-ownership-statis...
[2] https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
You have to stretch to get even one of those claims to be true.
Has DoorDash put some restaurants out of business, probably. Have they put restaurants out of business, absolutely not.
Has Airbnb raised home prices, yes by around ~1%. Have they destroyed the dream of home ownership, lol no. We're talking about ~$5k on the loan which isn't making or breaking anyone. And claims on destroying communities are dubious because they're just not that dense in places where people actually live.
Has Facebook increased political polarization and sent people down the right-wing pipeline, yep. Would this have happened anyway with a constellation of smaller social media sites, it already has.
I'm grateful for VCs throwing money around at various things that may or may not work. We would not be in a better world if all money went into low risk investments.
Nice Artice!
091 2898 185