14 ms·

Airbnb says this man does not exist. So I had coffee with him

184 points by antr 13y ago

bradleyjg 13y ago
> The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand disciple, and, in the parlance of Silicon Valley, views himself a disrupter. Making money by breaking regulations and lease terms is hardly the stuff of the heroic inventor. What other criminals count as "disrputers"? Insider traders? Identity thieves? Insurance fraudsters? This guy is sociopath and I hope he ends up in prison.
- S4M 13y ago
  Yeah, I hate the fact that his actions will have for consequence to even increase the rents and real estate prices in New York, which, from what I heard, are already expensive enough.
- aliston 13y ago
  You also have to also ask why it is that these arbitrage opportunities exist in the first place. It seems to me that the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry. Perhaps the government shouldn't be implementing arbitrary taxes to direct to the politically connected.
  - deleted 13y ago
    [deleted]
  - pyduan 13y ago
    The fact there are arbitrage opportunities are precisely the reason the regulations exist. The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it. I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.
    - cbr 13y ago
      which will in turn reduce the supply of apartments available for residents If the cities allow new construction the supply should expand to match the increased demand, creating jobs in the process.
      - ceejayoz 13y ago
        Manhattan has somewhat limited space for new construction.
        hapless 13y ago
        Manhattan could re-zone to permit a great deal more construction, but it is unlikely to happen. First, residents strongly oppose it. Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
        saalweachter 13y ago
        What is the zoning like in Manhattan? I see intermingled residential/office/commercial spaces everywhere I go (heck, my last office was in the same building as apartments, with a store-turned-restaurant on the ground floor), so I didn't realize there were zoning restrictions in that sense.
        hapless 13y ago
        lots and lots of historic districts there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood environmental impact studies (weirdly) can be used against projects local "community boards" have a lot of power and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
      - 13y ago
  - bradleyjg 13y ago
    The FREEEDOM!!! argument only works for landlords who own the whole building and are running a hotel without following the hotel laws. People who are subletting in violation of thier lease terms or co-op/condo agreement are not only breaking the law but also willfully breaching contracts they have freely agreed to. I thought that libertarians considered negotiated contracts a key mechanism of ordering a society?
    - yoshokatana 13y ago
      I'm not a libertarian, so I can't speak on OP's argument, but in NYC the ability for renters to sublet their apartments is enshrined by law, and technically any contract that doesn't allow subletting is breaking said law (which, if I remember correctly (and IANAL), makes that clause of the contract void, but not the rest of the contract).
      - auctiontheory 13y ago
        Ooh, my inner Scheme programmer likes nested parentheses in a post! I believe NYC forbids short-term sublets - that's the big issue here. Plus the taxes, of course.
      - mbreese 13y ago
        Subletting is well regulated too... yes, renters have the right to sublet, but they also have a set of restrictions on the process. For example, you can't sublet for less than 30 days, which would make the entire thing unusable for AirBnB. And if the apartment is rent controlled, then you have another set of regulations.
  - _delirium 13y ago
    He's violating contracts he signed, not only government regulations. These contracts are in place specifically because the market demands them. Most people don't want to live in a condo building that also includes DIY hotel rooms. Taking this into account, condo developers usually include clauses in the sales contract where your more or less agree not to turn your condo into a hotel room. This allows them to reassure prospective purchasers that such a scenario won't happen. That's why the person in this story not only needs to avoid the government, but also private-sector contract enforcement. Hence, he's looking for buildings with no doorman and no live-in super, since those would be more likely to notice his illicit activity. I don't see how that's libertarian or even Randian. Rand's view was that violating a contract is an act of indirect violence, essentially theft.
    - avn2109 13y ago
      >>"These contracts are in place specifically because the market demands them." The devil's advocate here would say, "These contracts are in place because the market is rigged here by powerful, entrenched, rent-seeking interests that are colluding."
  - auctiontheory 13y ago
    the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry The "inefficiency" you've spotted is that a business which ignores all rules, regulations and taxes will have a huge competitive advantage over those who comply. That's true in any industry, not just housing.
  - saalweachter 13y ago
    You can also take advantage of the arbitrage opportunities created by the regulations against selling cigarettes and beer to minors and make a tidy profit. A similar opportunity exists for all sorts of waste disposal, if you ignore all the pesky environmental regulations.
  - azernik 13y ago
    By that argument, tax evasion of any kind is a symptom of "inefficiencies in the government regulation of income". Just because someone has a financial incentive to violate the law, doesn't mean that the law is bad.
  - awkward 13y ago
    Is "inefficiencies in government regulation" code for taxes?
- moocowduckquack 13y ago
  He seems fairly dislikable and he is probably on the wrong side of the law, but what possible benefit would prison be here?
  - dllthomas 13y ago
    It might be of benefit to neighbors he is bothering, and by extension anyone else who will be forced to bear the brunt of externalities he similarly ignores in the future.
    - moocowduckquack 13y ago
      If it is externalities that you are worried about, the externalities from him being in prison are likely to be far higher than the externalities of him trying to rent out a few apartments. I don't agree with the guy, but I also suspect he may have a point about some of the regulations being over prescriptive. Also, I think that believing that this guy should be in prison for these actions is far more sociopathic than anything this article claims that this guy is doing.
      - dllthomas 13y ago
        The costs of punishment almost always exceed the cost of the individual action. The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement. Having said that, I am extremely sympathetic to the notion that NYC markets may be over-regulated, and have mixed feelings about the notion that evasion is an appropriate way to deal with that. I don't necessarily think this guy should be in prison; I was narrowly answering your question: "[W]hat possible benefit would prison be here?"
        chongli 13y ago
        The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement. And therein lies the rub. Sociopaths are not deterred by any but the most credible of threats. They will always find new avenues of exploit down at the bottom. To make an extreme effort to try and wipe out all sociopaths, parasites, free riders (or whatever else you want to call them) would impose enormous, crippling costs on our society.
- ForHackernews 13y ago
  > He considers himself a New York entrepreneur who wants to make a buck and doesn’t have much patience for what he views as arbitrary rules and regulations, such as those that govern renting apartments to Airbnb subscribers. I don't see how this guy is any different from Airbnb itself (or other disruptive-and-dubiously-legal operations like the various digital gypsy cab companies).
  - hapless 13y ago
    He's not very different from AirBnB. He breaks the law directly. AirBnB merely induces its customers to break the law. In both cases, they're bad actors.
    - 001sky 13y ago
      This doesn't follow. AirBnB does what it does. The laws in each and every area do what they do. There is no need for them to overlap, nor does a legal entity taking a position against AirBnB's potential customers make them a 'bad actor'in the general sense.
      - philwelch 13y ago
        I appreciate the concept of disobeying unjust laws, but I don't think hotel taxes are a valid example.
        deleted 13y ago
        [deleted]
    - deleted 13y ago
      [deleted]
    - patcon 13y ago
      airbnb is a bad actor? Come on. It's not nearly that simple. The Helsinki Design Lab (HDL), a governmental agency originally created in 1968 to encourage design thinking in Finland, engaged in an interesting study. In Helsinki, there's an unofficial day where historically, citizens have essentially opened illegal restaurants for the day. They sell out of homes and apartments and open windows, or often just give it away for free. Obviously all of this is highly illegal, but it's an amazing cultural experience that is beloved. HDL polled some of the people who created these pop-up restaurants, trying to figure out whether they had any interest in openning real restaurants. The answer was an overwhelming no. So the lab set out to answer an interesting question: "Why is it that none of these people who open free restaurants for a day -- these entrepreneurs who clearly love the essence of serving and creating food -- why is it that they find it such a ridiculous proposition to open a business?" It's a good question and worth asking. Here was a result of that investigation (among other things, such as streamlining the bureaucracy around registering and managing the business): http://www.helsinkidesignlab.org/dossiers/open-kitchen http://www.helsinkidesignlab.org/dossiers/open-kitchen You say AirBnb is a "bad actor" for breaking the law, and I say that that's incredibly unimaginative. Every single person on airbnb wants to open a hotel, but they frankly disengage from the formal process, likely for valid reasons. AirBnb is helping to identify that this is a problem that needs solving.
- coderzach 13y ago
  I think you're conflating morality and legality. How does breaking regulations make him a sociopath? Who is he harming? In what world is renting an apartment, albeit against regulation and terms of the lease, an offense ANYWHERE NEAR insider trading, identity theft, or insurance fraud? Am I missing something?
  - hapless 13y ago
    * He is defrauding his landlords. They rented him property on the understanding that it was a legal and low-risk engagement. * He is hurting the neighbors to the properties he re-rents. They arranged to live in residential neighborhoods adjacent to other semi-permanent residents, not an illegal hotel. Hotels are not found in charming residential neighborhoods for a reason: nobody wants to live next to them. * He is evading taxes that are used to improve new yorkers' quality of life at little/no expense to local residents. * Insurance fraud is a probable consequence of his business. Since it's hard to get commercial insurance for your illegal venture, if he has ANY insurance, it would be a renter's policy and maybe a personal umbrella policy. Any claims he made would be fraudulent.
    - Turing_Machine 13y ago
      "used to improve new yorkers' quality of life at little/no expense to local residents" Well, except for the losses from non-visitors who avoid cities with outrageously high "let's rip off our guests" taxes. Those people may not be directly visible, but I assure you they are real.
      - hapless 13y ago
        if a 15% hotel tax is what steers you away from one of the world's preeminent tourist destinations, I'm not sure that you were going to add much to the local economy. (To be a little less snarky, the microeconomics of the situation indicate it's probably not that damaging. Your hotel stay is probably less than half of your costs of visiting, so a 15% markup on that component alone doesn't raise the overall price of a trip very much.)
- yapcguy 13y ago
  The guy doesn't exist. The whole article is a work of fiction. Pando must be desperate for traffic. > After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing. Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms?
  - fwr 13y ago
    To be fair, there are a lot of other ways to "make a killing" in HFT which are not developing software and algorithms for hedge funds or large banks.
  - S4M 13y ago
    I was surprised by that as well, but there may be some explanation. For example, he was a teenage hacker and had connections - through his family or other. So maybe he knew someone at a high frequency trading hedge fund who saw that the guy could code, and gave him a chance. I agree that it's a bit far fetched, but IMHO it's plausible and I wouldn't be surprised if more than one person had already landed a lucrative job in the financial sector that way.
  - rollo_tommasi 13y ago
    Or maybe he just lied? He doesn't seem like the most trustworthy kind of guy to begin with.
  - Mikeb85 13y ago
    > Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms? No kidding. Not to mention, if he indeed 'made a killing' in the finance industry, why would he be hustling trying to resell iPads and now Air-bnb suites? Seems something programming-related or becoming an ex-pat in a tropical country with nice beaches would be more suitable for someone in their 20's that hates their job and has a lot of money...
- ErikAugust 13y ago
  While I think your final statement is rather vitriolic, I do agree the article styling him an "entrepreneur" or "disrupter" is ridiculous. He is a step or two above a drug dealer. That's about where I would land him.
  - dnautics 13y ago
    would you have said the same about a speakeasy bartender during the prohibition era?
    - ErikAugust 13y ago
      Somewhere between the bartender and the owner.
    - JimmyM 13y ago
      Surely such a person would be literally on the level of a drug dealer?
    - Nursie 13y ago
      And is this guy a terrorist or a freedom fighter? It can be very hard to tell.
  - eruditely 13y ago
    Your moral values a complete replica of the state?
- olalonde 13y ago
  > This guy is sociopath and I hope he ends up in prison. Woah, that escalated quickly. This type of comment is more what I would expect from a sociopath then the mostly harmless individual described in this article. Don't you have any empathy for him? Have you considered that the author might not have depicted him in an accurate way? Don't you think prison would be a disproportionate punishment for his alleged crimes? Geez, the world is not black and white.
  - greenyoda 13y ago
    People go to prison for tax evasion pretty regularly. This guy seems to be deliberately evading the NYC hotel tax on many transactions per year.
- deleted 13y ago
  [deleted]
- bjornsing 13y ago
  And OP continues: > Business is a zero-sum game. That's pretty much as far from "libertarian Ayn Rand disciple" as you can get. This Man That Does Not Exist sounds more like a Libertarian Straw Man, serving the purposes of a writer with an authoritarian streak.
  - jasonwocky 13y ago
    Plenty of "disciples" cling to a few soundbites from their idols that enable them to rationalize their behavior, without ever seeking to understand their idols' broader points.
- trippy_biscuits 13y ago
  Isn't his logic/mentality the same as those who speed while driving?
hapless 13y ago
He knows that neighbors despise what he's doing, but he doesn't see any reason for us to have hotel regulations. That might stop him from making money. Color me surprised that he's a Rand disciple.
- RockyMcNuts 13y ago
  Must be nice to go through life believing you're entitled to ignore externalities that cause discomfort to others, or not pay for public goods that you benefit from. Keeps things simple when you just have to worry about getting what's yours.
  - hacker789 13y ago
    Everyone is entitled to (and does) ignore externalities that cause discomfort to others. If Alice performs well at her job, and her company gains a lot of marketshare as a result, she has likely caused discomfort for the employees of her company's competitors. It's frightening to imagine a world in which Alice is forced to stop performing as well because of her competitors' discomfort. A simpler example: "hapless" is all over this thread, causing discomfort for those who don't want this man thrown in prison. Should "hapless" be forced to stop? Additionally, everyone is entitled to (and does) ignore public goods that they don't pay for. It's frightening to imagine a world in which we force Alice to pay for her neighbor's renovations, or to pay for a weekly advice newsletter she never signed up for. People like the man in the article make these value judgments more independently from government policy than most people do. If anything, that is your contention with him, not that he doesn't pay for things he didn't ask for, and not that he sometimes ignores the discomfort caused by his actions.
    - beering 13y ago
      I think you misread the comment you're replying to. People are not entitled to ignore all externalities that cause discomfort to others. For example, creating toxic pollution that spreads to people around you and forcing them to pay the cost of cleanup is not OK, but you're suggesting it is? If you were affected by this kind of pollution, would you just shrug and say, "It's OK for them to ignore this externality?" And the part about not paying for public goods that you use, you seem to have misread as "not using public goods that you don't pay for". People are upset with the AirBNB guy in the article because he's causing problems for the neighbors, and profiting because he's ignoring regulations. It's profiting off the backs of other people, so he's more like a leecher than any Ayn Randian hero.
johnbpetersen 13y ago
I'm going to start selling drugs to kids on the playground of their elementary school so I can get some shady investors and be labeled as a disrupter.
- jeiting 13y ago
  Two very different activities.
- nico 13y ago
  If you get away with that, you would actually be a disrupter, except not a particularly nice one. Currently the most successful people doing that are child psychiatrists and big pharma, but they convince the parents to buy the drugs for the kids instead. Government seems to be fine with this though, as well as most of society.
  - johnbpetersen 13y ago
    well played
dllthomas 13y ago
"Business is a zero-sum game." I'd be surprised if he actually thinks this (though only mildly) - Some business activities are zero-sum, but in general business exists precisely because it's not a zero sum game.
- hapless 13y ago
  He's a criminal. Of course his business is zero sum. His profits and the consumer surpluses of his customers are balanced against the losses to society.
  - dllthomas 13y ago
    The claim that his business is zero sum is tremendously more narrow than the one that was made. Even so, it's probably false. Very much criminal activity has a negative sum (eg, smash a window to steal a laptop). It's also perfectly possible for an illegal activity to nonetheless have a positive sum (legislators are imperfect, laws are necessarily generalizations, etc); though we shouldn't expect it in any individual case, I think it's most likely to be the case in a situation like this with a willing exchange of goods (where there clearly is a surplus for two parties).
  - randyrand 13y ago
    His business is not zero-sum. It actually creates wealth. People that used to not be able to afford a visit to New York now can.
    - hapless 13y ago
      That is the consumer surplus for his customers. The criminal vendor and his customers are always individually better off, or else no transaction would take place. Society suffers from the externalities of a criminal business.
      - randyrand 13y ago
        Your logic is flawed. This business is not zero sum. It literally creates wealth. Your dollar now buys more than it did before. Taxation is zero-sum. Your dollar that you would have spent literally gets taken from you to be spent somewhere else. No wealth is created. Similarly, no wealth is lost when people evade tax - but we do have less for the government to spend obviously. Also, at a large scale "the customers" are the same as "society." Externalities are an important topic but what are those externalities? Fewer tax dollars, annoyed neighbors, that all I can think of. Both of those are easily solvable problems in a free market. Allow apartment complexes to choose if they allow airBnB. The benefit far outweighs the negatives. There are also positive externalities. We all benefit from sharing our resources. Air BnB should be legalized. That would also get rid of some of the externalities of crime, like paying for prison and enforcement of laws.
yetanotherphd 13y ago
Interesting article but they really should have dropped the "man who doesn't exist" stuff after the first paragraph.
- trimbo 13y ago
  Good point. Typically journalists would do something like "We will refer to him as Joe, not his real name."
nico 13y ago
I'm impressed by how much hate is directed in the comments to the guy in the article. Seems like a lot of people here are either jealous about this guy "hacking the system", or are just too self-righteous. Why not instead use the article (as it was probably intended) as a way to think and debate about things that are hard to agree on or that are hard to define? This caught my attention for example: "The Man Who Does Not Exist claims regulations that govern rental apartments are akin to drug laws. They are useless, unenforceable, and an affront to the general public.", and although I don't have a strong opinion about hotel regulation in NY (or elsewhere), I do agree that current drug laws pretty much only benefit government agencies (they get funding) and drug cartels (by artificially raising prices).
- hapless 13y ago
  I approve of the law as it stands. Hotel taxes and hotel regulation improve my quality of life. He breaks the law for money. As a result, I would like to see him punished. (As a secondary matter, he is loathsome for defrauding his landlords -- renting out space to be used as a hotel is a much higher-risk proposition than a long term residence)
  - nico 13y ago
    Except there is a debate now, because hotel law was not created to regulate people renting out their places. So now people on both sides need to agree on a solution, given it's not clear whether hotel laws apply directly to people on Airbnb or not. This is a similar (if not the same) issue that Uber/Lyft and similar companies are facing with current regulation all over the world. Slavery was legal in the US for a long time, and a lot of people were fine with it. Does that mean it should have stayed that way?
    - hapless 13y ago
      Hotel law was absolutely created to regulate people renting out their places. The early working-class hotels were owner-occupied tenements with short leases. Hotel regulation was written with that picture in mind. And I simply cannot believe you compared hotel regulation to the institution of slavery. It is not just in-apt, it is totally inappropriate. You should feel ashamed of yourself.
zachrose 13y ago
"According to NYC Research and Analytics, the average price for a hotel room in New York City is $281 a night. That’s for all five the boroughs. In Manhattan, it’s hard to find a room for under $350. Add that hefty 15 percent tax and lodging in Manhattan is an activity for the 1 percent." Yes, hotels in Manhatten are expensive, but calling it an activity for the 1% is a stretch. The rhetoric of 99%/1% was in response to 1% of US earners taking 20% of total income, at an average of like $400,000.
psn 13y ago
I'm bored; lets go deeper. Why think the man who does not exist exists? why not assume pando made him up, and made the whole story up? The story isn't so implausible that people would doubt it. If anything,the story is toogood - count the number of times the man comes across as a bad guy. Randian of the worst kind? tick. Used to work in wall street? tick. In HFT? tick. Why did he grant an interview if he was trying to keep his business secret? I don't know if the story is made up, but its ringing bells in my head...
alanctgardner2 13y ago
Why does AirBnb even allow more than one listing per user? How many people have multiple residences which they can legitimately rent out legally? It seems like it would stem a lot of criticism if they only allowed one residence per user, along with real-name and address verification (which they already use for renters).
- marquis 13y ago
  There are a few places listed, for example in California, that are actually registered as hotel/hostels and pay city taxes and advertise multiple rooms. Though, I don't see they should be on AirBnB in the first place (my view is that if you are a business you should not be on AirBnB).
  - _delirium 13y ago
    As an AirBnB user I would really like a way to at least filter such places out of my searches. When I rent on AirBnB I want to rent from an individual who lives in their home; I see it as basically couchsurfing but with money and (often) nicer accommodations. If I wanted to rent a hostel bed or a room from a vacation-rooms-for-rent agency, I'd be on another site. I basically treat them as spam in the search results.
  - mahyarm 13y ago
    Best buy also lists on ebay.
marquis 13y ago
>Current laws, for example, include a tax that goes directly to the Javits Convention Center — a place scant numbers of New Yorkers have ever visited. And yet which brings thousands and thousands of visitors to New York (with spending and lodging money) yearly. Move the Javits Center to Jersey and the surrounding hotels, restaurants and immeneties suddenly have very little reason to be there.
- bbanyc 13y ago
  In theory that's how convention centers should work. In practice, the Javits Center is isolated by the surrounding railyards and few desirable amenities have sprung up in the area. (This may finally change in a few years' time with the opening of the Hudson Yards redevelopment and the western extension of the 7 subway - so of course it's been proposed to tear down Javits and build a new convention center at the even more isolated Aqueduct Racetrack site. Ugh.)
  - marquis 13y ago
    Ah, I didn't know it was proposed to relocate. What would be the benefit to having a convention centre away from built-up areas where it's even harder to get to (or get away from..)
ErikAugust 13y ago
"Entrepreneurship fits him." No, sounds like easy-to-pull-off arbitrage models fit him.
- bluepool 13y ago
  Which is the core of entrepreneurship: Deliver something at a price that is more than what you paid for that thing.
Lucadg 13y ago
I've been making tourist apartments available online since 2001, long before Airbnb (a competitor for me) even existed, and I never heard anyone in any city ever complain about tourist apartments, be it Prague, Venice or Paris. What happens is that a certain, usually small, percentage of residential apartments is made available to the tourists. Each apartment means about one/two less hotel rooms. Hotel rooms take space too, they are not floating over the city. They often replace old residential buildings to build hotels effectively taking away space from residents who are pushed out of the city. So we may say that tourism takes space in the center, not apartments. I didn't hear much complain about this neither, as tourism brings money and, if anything, they want more of them. It seems to me that NY has a very specific situation so Airbnb may be actually harming the residents, I don't know, but in general Airbnb is not doing anything particularly new in Europe, where apartments for short term rent have been existing for long time. The hype is all about "rent from another human being" but the reality, and I guess most of their business in Europe, is simply providing a better platform. Maybe NY regulators could look at Prague or Croatia to solve the problem. [edit: formatting]
- wcummings 13y ago
  Housing in NYC is definitely a special-case, people should keep this in mind when discussing AirBnB
- modfodder 13y ago
  I believe, imho, that the issue has exploded because AirBNB is a Silicon Valley backed company, and the worry is with explosive growth and scale. It's not a big problem when a miniscule amount of the apartment stock is tied up as short term rentals, but it can become a huge problem as that percentage grows. The public and our representatives in government are more internet savvy too so these issues (or at least the stories) bubble to the top more quickly. As a resident in NY and I can appreciate the ability AirBNB gives me to rent out my apartment easily (I haven't). But I also see that "The Man That Doesn't Exist" is "stealing" apartment stock for hotel use, which drives up my cost of living as a renter (on the flipside, his "theft" of the apartment would be beneficial to me if I was an owner, driving up the value of my property).
nlh 13y ago
I don't think AirBNB actually claims this guy doesn't exist - that's a clickbait gimmick. What they do claim is that he's in the minority, which I believe is true. I'm an AirBNB host in NYC and I know a lot of other people who are too. We're all exactly the kind of people AirBNB wants -- we have places that occasionally are available/empty, and AirBNB has become a great way for us to make a few extra $$. I personally don't make a dime of profit off my place (I do, however, offset a good portion of my rent). I know the bad actors exist, and I know we do need some form of compromise between "No AirBNB!" and "AirBNB free-for-all". Not sure what the perfect solution is just yet, but I m confident a good one can be found.
- hapless 13y ago
  The good compromise already exists: * Sub-leasing is legal in NYC, for medium-term rentals. You are free to sub-lease your place during your month in europe, you are not free to sub-lease it nightly to transients. * Owner-occupied Bed-and-Breakfasts are legal, but carefully regulated. If AirBnB restricted itself to listings in these two (completely legal) categories, no one would object to them.
RubberSoul 13y ago
If you're going to break the law, why go to the trouble of forming a Delaware LLC? Won't that draw more attention to the operation and result in double taxation? Doesn't it also mean breaking Delaware law by forming a corporation for illegal purposes? Title 8, Chapter 1 says "A corporation may be incorporated or organized under this chapter to conduct or promote any lawful business or purposes..." Furthermore, he takes all these steps to avoid 15% hotel tax, but pays 30% on the LLC profits and then pays income tax when he takes earnings from the LLC? Am I missing something here?
- stefan_kendall 13y ago
  LLCs aren't double taxed. Or S-corps.
- gojomo 13y ago
  The LLC can be taxed as a pass-through/partnership... meaning no double-taxation. Any income taxes are only on net income, while I believe the hotel tax is on gross revenues.
- gamblor956 13y ago
  No you're not. It's another arbitrage play. He's creating the LLCs to cap his legal liability for each rental unit while at the same time trying to get the benefit of pass-through taxation benefits (meaning, no corporate level income tax but also meaning that all of his income is subject to gross taxation). In practice, it probably wouldn't work. LLCs are subject to a lower veil-piercing threshold in New York than corporations are (though the requirements are otherwise generally the same), so the LLC will do little to protect him legally, especially since he's violating Delaware's laws regarding the formation of the LLC. He's also most likely using this structure avoid attracting unwanted attention, since one of NYC's avenues for tracking down AirBnB offenders has been to compare corporate filings with rentals offered on the site.
asveikau 13y ago
> Current laws, for example, include a tax that goes directly to the Javits Convention Center — a place scant numbers of New Yorkers have ever visited. > “Why are they entitled to a cut?” he asks. The hotels may pay the tax, but I believe the idea behind this sort of arrangement is that they would take this into account when pricing rooms. So effectively, out of towners pay the tax when they get a hotel room. Even if you ignore the other benefits the city and its businesses get from out of towners passing through, the question being asked here is: why does money paid by out of towners go into something that benefits out of towners? Of course I agree with others that this story is at least embellished, too much of this guy's history seems like goofy fantasy. (Paying homeless people to purchase iPad 2 for export, really?) So this question being asked probably reflects the author more than it does the interview subject.
xacaxulu 13y ago
Cartels hate competition. I love AirBnB because they level the playing field.
7Figures2Commas 13y ago
> After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing. > Thus far, he's found two properties that fit the bill. He charges around $500 a night for the first one; this second one is set to launch in the coming weeks with a similar price tag. He’s received funding from outside investors... Parts of this story seem odd. If the Man Who Does Not Exist made a "killing" in finance, why exactly does he need or want investors for this venture? It sounds like the investment required is relatively modest and would quickly be recouped. And I can't imagine that increasing the number of people formally involved in his illegal enterprise will be to his benefit when, for one reason or another, the gig is up.
webmaven 13y ago
There is probably enough information (# of properties, rates, $78k, etc.) in the article for AirBnB to de-anonymize The Man Who Does Not Exist if they wish.
grellas 13y ago
I am intrigued by the antipathy that is often expressed toward Airbnb in the very circles where technological changes is heartily approved. Much of this antipathy is centered around the issue of persons who use the service to circumvent local laws and regulations governing hotel and rental units, with the complaint being that illicit profiteers should be suitably punished and (impliedly) so should those whose services allegedly abet them. This piece makes that complaint without stating it directly dramatizing the fact that such a person is there, in the flesh, exploiting the system, while stating that Airbnb wants to deny his existence. Legally speaking, Airbnb is like YouTube and similar services in offering a service that is perfectly legal to do in proper cases and that can be done today to the immeasurable benefit of many in ways that could not even have been dreamed of in the pre-internet age. When the service is used legally and properly, it transforms how millions of people do things in their lives and does so for the better: in YouTube's case, as an outlet for video display and in Airbnb's, as a way of helping all sorts of people make more efficient use of their residential holdings. When the service is misused, however, others can be hurt: in YouTube's case, with persons posting and potentially profiting by infringing the copyrights of others; in Airbnb's, with persons attempting to circumvent laws regulating uses of commercial rental space. In each case, there is legitimate reason for many to complain of the misuses because they hurt people and people react to being hurt, and the law has measures in place to punish the direct malefactors in various ways. Yet what does this mean, legally speaking, for the provider of a lawful and, indeed, exceedingly useful service that is seen to profit in part from the activities of those who not only use their service legally but also from those who do not. When you get to such cases, you arrive at the intersection of law with public policy. Unless one is to bar technological progress and the change that it brings altogether, one must devise rules to address the illegal uses that are bad while preserving incentives to promote the technological progress that is good. In the case of YouTube, this was done through DMCA, which (whatever its other problems) did a pretty good job of setting up safe harbors that enable services such as YouTube to continue to do what they do without incurring liabilities for the wrongs of malefactors while at the same time requiring them to build in safeguards to protect the rights of those who might be hurt by their wrongs. This was not an easy task and even today the courts are sorting through the frictions occurring at the edges. But, though not perfect, the law has set up fundamental rules that, in the end, have managed to curb a good number of the wrongs while enabling a worthwhile service to survive and prosper. In the case of Airbnb, the fights are occurring at the local level and are at an early stage. As the players sort through the policy issues, though, the same sort of primary issue needs to be addressed as happened with YouTube in the video streaming area: how can the rights of victims of third-party wrongdoers be protected without barring or significantly impairing the new-found value for many in using a great new service wrought by technological advances (and, of course, by the skills and talents of those who have built the service)? I don't know the New York rental market at all and have nothing to say about how the issue is best resolved for the various persons affected by Airbnb's service there. I sense intuitively, though, that things like "15% across-the-board tax" are innately retrograde solutions that would serve to choke the beneficial and legal side of the service. Occasional users really are not in the business of providing hotel lodgings and it is a pretty big leap to say that they should be required to pay taxes as if they were. Or to require them to be subjected to liabilities and risks in ways that hotels are. These "solutions" are really just a way of governmental regulators, should they adopt the, acting on behalf of some narrow lobbing interest or other to choke a service that benefits countless others. They are overkill and would be the same as if Congress, at the federal level, had passed laws saying that YouTube-style services should be banned because they can facilitate copyright infringement that hurts others. That sort of "solution" would have been folly in our digital age and so too would any overkill-style governmental solution affecting any beneficial and innovative technologically-driven service that can come about by linking what people have to offer with what people need to use, and that includes Airbnb. Many other such services can easily follow (the "Airbnb for food" or the "Airbnb for whatever"). Do we really want to choke off the great benefits that can come from all this just because third-party abuses can arise. The key to all this is to deal with the abuses while preserving the values conferred by the new services. If there is antipathy toward the wrongdoers, there is no basis for directing this to the innovators themselves. Why this should be happening among those who otherwise favor technological change is something that really baffles me. I for one commend Airbnb for what they are doing and for the benefits it can bring to many. If they make fortunes out of it all, so much the better. The potential third-party abuses do need to be dealt with so that innocent people are not harmed. But they need to be dealt with in narrow ways focused on the actual problems, not in blunderbuss fashion that is short-sighted and, in the long run, harmful to us all.
x0054 13y ago
Not sure why, but instinctually, I really do not like the man who does not exist. Perhaps it's because I am an Ayn Rand hating libertarian. Or perhaps it's because he is the kind of man who takes advantage of the market with little to no regard to externalities, and when someone questions his actions, he wraps himself in an American Flag and screams about his god given rights.
anon4 13y ago
What's so hefty about a 15% tax? Just pay the city the 15% and pocket the rest. If you need to, raise the price a bit. Assuming your rent is 500$/month, to give one room to some random person for a night you should charge them 20$/night to offset your entire rent for that day after deducing the city tax. The person in the article charges 500$/night. In that case you can even charge 50$/night and make money on top of having enough to pay rent. In no case would you need to charge more than a hotel - you both pay 15% tax, but you don't need to pay a whole hotel's worth of workers for that room's upkeep.
- exhilaration 13y ago
  There are other issues, in many jurisdictions being a legally zoned hotel requires things like sprinklers that the average AirBNB lister might be unwilling or unable (in the case of a renter) to invest in.
CamperBob2 13y ago
The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand disciple, and, in the parlance of Silicon Valley, views himself a disrupter. Business is a zero-sum game... It would be so nice if journalists who write about "Ayn Rand disciples" would actually read something by her first, so they would know what they're talking about.
- jasonwocky 13y ago
  Why? Assuming he's being truthful, all he's reporting is what the Man claims.
- mcguire 13y ago
  Unfortunately, it's rather difficult to tell the difference between real Christians and those who merely say that they are Christians.
rajacombinator 13y ago
So is the hotel industry paying bloggers to write these hit pieces?
yetanotherphd 13y ago
There seems to be some confusion about the term "externality" in this thread that I want to clarify. Not every effect that a person has on someone else is an externality. In general, externalities are direct physical impacts you have on others. In this case, noise is a good example, though the general "vibe" of having strangers moving in and out, and the risk of violence from these people, assuming it is higher, is also an externality. On the other hand, anything that operates via prices is never an externality. If AirBnB increased demand for rental housing and therefore raises prices, this wouldn't constitute an externality. The ethics of free market economics basically states that the government should regulate externalities, but if someone is only effecting you via market prices, that's your own problem. Another kind of externaility is network externalities. Even though pricing residential housing out of the market isn't itself an externality, there may be a network externality associated with residential housing which means that the market wouldn't provide the optimal balance of residential housing and hotels (even if there was no noise issue). Because of this, the government may also want to intervene by restricting the total amount of hotels. However, I doubt this is a big factor in real life since the demand for hotels is clearly much smaller than the demand for residential housing (who spends more than a tiny fraction of their life in a hotel?)
e12e 13y ago
So, he rents out an apartment for 500 a night, while an average hotel room is 281 -- or 244 ex 15% tax. His 500 with added tax is 575. Essentially this is in the same price range? Am I missing something? So, he makes an extra profit dodging taxes (as he did by dodging VAT by smuggling ipads). Well, surely it isn't news that crime does pay, as long as you can avoid getting caught?
microcolonel 13y ago
Why should these restrictions even exist in the first place? People claim it's about recourse, but that's what review sites and extensive contracts are for. The author(s) of this drivel obviously want to paint this man in 50+ shades of dark grey and blood red, but really is there anything wrong, morally, with what he's doing, what is the purpose of the law other than to retroactively add value to the investments of people who could already afford to offer housing like this, and increase the barrier to entry for those who couldn't?

184 points by antr 13y ago

> The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand disciple, and, in the parlance of Silicon Valley, views himself a disrupter. Making money by breaking regulations and lease terms is hardly the stuff of the heroic inventor. What other criminals count as "disrputers"? Insider traders? Identity thieves? Insurance fraudsters? This guy is sociopath and I hope he ends up in prison.

S4M 13y ago
Yeah, I hate the fact that his actions will have for consequence to even increase the rents and real estate prices in New York, which, from what I heard, are already expensive enough.
aliston 13y ago
You also have to also ask why it is that these arbitrage opportunities exist in the first place. It seems to me that the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry. Perhaps the government shouldn't be implementing arbitrary taxes to direct to the politically connected.
- deleted 13y ago
  [deleted]
- pyduan 13y ago
  The fact there are arbitrage opportunities are precisely the reason the regulations exist. The problem is that the market equilibrium would be really bad for residents. You have to stop and think about what there being no such opportunity would mean: housing in these areas is in scarce supply, and letting the market do its thing would incentivize people to convert rooms to full-time hotels at the expense of people who actually live there (since the true market value of a room is much higher than the average rent; in other words, your arbitrage opportunity), which will in turn reduce the supply of apartments available for residents, thus making rent even more expensive than it is right now for the few that will be able to afford it. I agree the regulations are not perfect, but people have to understand it comes from a conscious political decision to protect residents. And this by the way is why you need a government to create such rules, because contrary to what people like the man in this article might think, the market equilibrium is not always the most desirable situation.
  - cbr 13y ago
    which will in turn reduce the supply of apartments available for residents If the cities allow new construction the supply should expand to match the increased demand, creating jobs in the process.
    - ceejayoz 13y ago
      Manhattan has somewhat limited space for new construction.
      - hapless 13y ago
        Manhattan could re-zone to permit a great deal more construction, but it is unlikely to happen. First, residents strongly oppose it. Second, much of the transport system is maxed out. Building more housing or office space would only overburden systems operating at capacity. (e.g. the west side highway, fdr drive, lexington avenue subway line are all unusably crowded)
        saalweachter 13y ago
        What is the zoning like in Manhattan? I see intermingled residential/office/commercial spaces everywhere I go (heck, my last office was in the same building as apartments, with a store-turned-restaurant on the ground floor), so I didn't realize there were zoning restrictions in that sense.
        hapless 13y ago
        lots and lots of historic districts there are crippling height restrictions all over the place, and you have to buy un-used "air rights" from your neighbors to build anything taller than what already exists in the neighborhood environmental impact studies (weirdly) can be used against projects local "community boards" have a lot of power and the aforementioned centrally imposed limits on development -- the city's top-level boards may not like what you're doing to transportation
    - 13y ago
- bradleyjg 13y ago
  The FREEEDOM!!! argument only works for landlords who own the whole building and are running a hotel without following the hotel laws. People who are subletting in violation of thier lease terms or co-op/condo agreement are not only breaking the law but also willfully breaching contracts they have freely agreed to. I thought that libertarians considered negotiated contracts a key mechanism of ordering a society?
  - yoshokatana 13y ago
    I'm not a libertarian, so I can't speak on OP's argument, but in NYC the ability for renters to sublet their apartments is enshrined by law, and technically any contract that doesn't allow subletting is breaking said law (which, if I remember correctly (and IANAL), makes that clause of the contract void, but not the rest of the contract).
    - auctiontheory 13y ago
      Ooh, my inner Scheme programmer likes nested parentheses in a post! I believe NYC forbids short-term sublets - that's the big issue here. Plus the taxes, of course.
    - mbreese 13y ago
      Subletting is well regulated too... yes, renters have the right to sublet, but they also have a set of restrictions on the process. For example, you can't sublet for less than 30 days, which would make the entire thing unusable for AirBnB. And if the apartment is rent controlled, then you have another set of regulations.
- _delirium 13y ago
  He's violating contracts he signed, not only government regulations. These contracts are in place specifically because the market demands them. Most people don't want to live in a condo building that also includes DIY hotel rooms. Taking this into account, condo developers usually include clauses in the sales contract where your more or less agree not to turn your condo into a hotel room. This allows them to reassure prospective purchasers that such a scenario won't happen. That's why the person in this story not only needs to avoid the government, but also private-sector contract enforcement. Hence, he's looking for buildings with no doorman and no live-in super, since those would be more likely to notice his illicit activity. I don't see how that's libertarian or even Randian. Rand's view was that violating a contract is an act of indirect violence, essentially theft.
  - avn2109 13y ago
    >>"These contracts are in place specifically because the market demands them." The devil's advocate here would say, "These contracts are in place because the market is rigged here by powerful, entrenched, rent-seeking interests that are colluding."
- auctiontheory 13y ago
  the fact that these folks exist is essentially the market arguing that there are inefficiencies in government regulation of the hotel industry The "inefficiency" you've spotted is that a business which ignores all rules, regulations and taxes will have a huge competitive advantage over those who comply. That's true in any industry, not just housing.
- saalweachter 13y ago
  You can also take advantage of the arbitrage opportunities created by the regulations against selling cigarettes and beer to minors and make a tidy profit. A similar opportunity exists for all sorts of waste disposal, if you ignore all the pesky environmental regulations.
- azernik 13y ago
  By that argument, tax evasion of any kind is a symptom of "inefficiencies in the government regulation of income". Just because someone has a financial incentive to violate the law, doesn't mean that the law is bad.
- awkward 13y ago
  Is "inefficiencies in government regulation" code for taxes?
moocowduckquack 13y ago
He seems fairly dislikable and he is probably on the wrong side of the law, but what possible benefit would prison be here?
- dllthomas 13y ago
  It might be of benefit to neighbors he is bothering, and by extension anyone else who will be forced to bear the brunt of externalities he similarly ignores in the future.
  - moocowduckquack 13y ago
    If it is externalities that you are worried about, the externalities from him being in prison are likely to be far higher than the externalities of him trying to rent out a few apartments. I don't agree with the guy, but I also suspect he may have a point about some of the regulations being over prescriptive. Also, I think that believing that this guy should be in prison for these actions is far more sociopathic than anything this article claims that this guy is doing.
    - dllthomas 13y ago
      The costs of punishment almost always exceed the cost of the individual action. The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement. Having said that, I am extremely sympathetic to the notion that NYC markets may be over-regulated, and have mixed feelings about the notion that evasion is an appropriate way to deal with that. I don't necessarily think this guy should be in prison; I was narrowly answering your question: "[W]hat possible benefit would prison be here?"
      - chongli 13y ago
        The question is the cost of enforcement in total versus the prevented cost in total, including both the costs that would be caused by this guy and the costs that would be caused by others that are deterred by the credible threat of enforcement. And therein lies the rub. Sociopaths are not deterred by any but the most credible of threats. They will always find new avenues of exploit down at the bottom. To make an extreme effort to try and wipe out all sociopaths, parasites, free riders (or whatever else you want to call them) would impose enormous, crippling costs on our society.
ForHackernews 13y ago
> He considers himself a New York entrepreneur who wants to make a buck and doesn’t have much patience for what he views as arbitrary rules and regulations, such as those that govern renting apartments to Airbnb subscribers. I don't see how this guy is any different from Airbnb itself (or other disruptive-and-dubiously-legal operations like the various digital gypsy cab companies).
- hapless 13y ago
  He's not very different from AirBnB. He breaks the law directly. AirBnB merely induces its customers to break the law. In both cases, they're bad actors.
  - 001sky 13y ago
    This doesn't follow. AirBnB does what it does. The laws in each and every area do what they do. There is no need for them to overlap, nor does a legal entity taking a position against AirBnB's potential customers make them a 'bad actor'in the general sense.
    - philwelch 13y ago
      I appreciate the concept of disobeying unjust laws, but I don't think hotel taxes are a valid example.
      - deleted 13y ago
        [deleted]
  - deleted 13y ago
    [deleted]
  - patcon 13y ago
    airbnb is a bad actor? Come on. It's not nearly that simple. The Helsinki Design Lab (HDL), a governmental agency originally created in 1968 to encourage design thinking in Finland, engaged in an interesting study. In Helsinki, there's an unofficial day where historically, citizens have essentially opened illegal restaurants for the day. They sell out of homes and apartments and open windows, or often just give it away for free. Obviously all of this is highly illegal, but it's an amazing cultural experience that is beloved. HDL polled some of the people who created these pop-up restaurants, trying to figure out whether they had any interest in openning real restaurants. The answer was an overwhelming no. So the lab set out to answer an interesting question: "Why is it that none of these people who open free restaurants for a day -- these entrepreneurs who clearly love the essence of serving and creating food -- why is it that they find it such a ridiculous proposition to open a business?" It's a good question and worth asking. Here was a result of that investigation (among other things, such as streamlining the bureaucracy around registering and managing the business): http://www.helsinkidesignlab.org/dossiers/open-kitchen http://www.helsinkidesignlab.org/dossiers/open-kitchen You say AirBnb is a "bad actor" for breaking the law, and I say that that's incredibly unimaginative. Every single person on airbnb wants to open a hotel, but they frankly disengage from the formal process, likely for valid reasons. AirBnb is helping to identify that this is a problem that needs solving.
coderzach 13y ago
I think you're conflating morality and legality. How does breaking regulations make him a sociopath? Who is he harming? In what world is renting an apartment, albeit against regulation and terms of the lease, an offense ANYWHERE NEAR insider trading, identity theft, or insurance fraud? Am I missing something?
- hapless 13y ago
  * He is defrauding his landlords. They rented him property on the understanding that it was a legal and low-risk engagement. * He is hurting the neighbors to the properties he re-rents. They arranged to live in residential neighborhoods adjacent to other semi-permanent residents, not an illegal hotel. Hotels are not found in charming residential neighborhoods for a reason: nobody wants to live next to them. * He is evading taxes that are used to improve new yorkers' quality of life at little/no expense to local residents. * Insurance fraud is a probable consequence of his business. Since it's hard to get commercial insurance for your illegal venture, if he has ANY insurance, it would be a renter's policy and maybe a personal umbrella policy. Any claims he made would be fraudulent.
  - Turing_Machine 13y ago
    "used to improve new yorkers' quality of life at little/no expense to local residents" Well, except for the losses from non-visitors who avoid cities with outrageously high "let's rip off our guests" taxes. Those people may not be directly visible, but I assure you they are real.
    - hapless 13y ago
      if a 15% hotel tax is what steers you away from one of the world's preeminent tourist destinations, I'm not sure that you were going to add much to the local economy. (To be a little less snarky, the microeconomics of the situation indicate it's probably not that damaging. Your hotel stay is probably less than half of your costs of visiting, so a 15% markup on that component alone doesn't raise the overall price of a trip very much.)
yapcguy 13y ago
The guy doesn't exist. The whole article is a work of fiction. Pando must be desperate for traffic. > After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing. Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms?
- fwr 13y ago
  To be fair, there are a lot of other ways to "make a killing" in HFT which are not developing software and algorithms for hedge funds or large banks.
- S4M 13y ago
  I was surprised by that as well, but there may be some explanation. For example, he was a teenage hacker and had connections - through his family or other. So maybe he knew someone at a high frequency trading hedge fund who saw that the guy could code, and gave him a chance. I agree that it's a bit far fetched, but IMHO it's plausible and I wouldn't be surprised if more than one person had already landed a lucrative job in the financial sector that way.
- rollo_tommasi 13y ago
  Or maybe he just lied? He doesn't seem like the most trustworthy kind of guy to begin with.
- Mikeb85 13y ago
  > Are we supposed to believe that a person who dropped out of college, with no computer science or programming background, is hired by a hedge fund or the proprietary trading desk of a large bank to help develop their HFT software and algorithms? No kidding. Not to mention, if he indeed 'made a killing' in the finance industry, why would he be hustling trying to resell iPads and now Air-bnb suites? Seems something programming-related or becoming an ex-pat in a tropical country with nice beaches would be more suitable for someone in their 20's that hates their job and has a lot of money...
ErikAugust 13y ago
While I think your final statement is rather vitriolic, I do agree the article styling him an "entrepreneur" or "disrupter" is ridiculous. He is a step or two above a drug dealer. That's about where I would land him.
- dnautics 13y ago
  would you have said the same about a speakeasy bartender during the prohibition era?
  - ErikAugust 13y ago
    Somewhere between the bartender and the owner.
  - JimmyM 13y ago
    Surely such a person would be literally on the level of a drug dealer?
  - Nursie 13y ago
    And is this guy a terrorist or a freedom fighter? It can be very hard to tell.
- eruditely 13y ago
  Your moral values a complete replica of the state?
olalonde 13y ago
> This guy is sociopath and I hope he ends up in prison. Woah, that escalated quickly. This type of comment is more what I would expect from a sociopath then the mostly harmless individual described in this article. Don't you have any empathy for him? Have you considered that the author might not have depicted him in an accurate way? Don't you think prison would be a disproportionate punishment for his alleged crimes? Geez, the world is not black and white.
- greenyoda 13y ago
  People go to prison for tax evasion pretty regularly. This guy seems to be deliberately evading the NYC hotel tax on many transactions per year.
deleted 13y ago
[deleted]
bjornsing 13y ago
And OP continues: > Business is a zero-sum game. That's pretty much as far from "libertarian Ayn Rand disciple" as you can get. This Man That Does Not Exist sounds more like a Libertarian Straw Man, serving the purposes of a writer with an authoritarian streak.
- jasonwocky 13y ago
  Plenty of "disciples" cling to a few soundbites from their idols that enable them to rationalize their behavior, without ever seeking to understand their idols' broader points.
trippy_biscuits 13y ago
Isn't his logic/mentality the same as those who speed while driving?

hapless 13y ago

He knows that neighbors despise what he's doing, but he doesn't see any reason for us to have hotel regulations. That might stop him from making money. Color me surprised that he's a Rand disciple.

RockyMcNuts 13y ago
Must be nice to go through life believing you're entitled to ignore externalities that cause discomfort to others, or not pay for public goods that you benefit from. Keeps things simple when you just have to worry about getting what's yours.
- hacker789 13y ago
  Everyone is entitled to (and does) ignore externalities that cause discomfort to others. If Alice performs well at her job, and her company gains a lot of marketshare as a result, she has likely caused discomfort for the employees of her company's competitors. It's frightening to imagine a world in which Alice is forced to stop performing as well because of her competitors' discomfort. A simpler example: "hapless" is all over this thread, causing discomfort for those who don't want this man thrown in prison. Should "hapless" be forced to stop? Additionally, everyone is entitled to (and does) ignore public goods that they don't pay for. It's frightening to imagine a world in which we force Alice to pay for her neighbor's renovations, or to pay for a weekly advice newsletter she never signed up for. People like the man in the article make these value judgments more independently from government policy than most people do. If anything, that is your contention with him, not that he doesn't pay for things he didn't ask for, and not that he sometimes ignores the discomfort caused by his actions.
  - beering 13y ago
    I think you misread the comment you're replying to. People are not entitled to ignore all externalities that cause discomfort to others. For example, creating toxic pollution that spreads to people around you and forcing them to pay the cost of cleanup is not OK, but you're suggesting it is? If you were affected by this kind of pollution, would you just shrug and say, "It's OK for them to ignore this externality?" And the part about not paying for public goods that you use, you seem to have misread as "not using public goods that you don't pay for". People are upset with the AirBNB guy in the article because he's causing problems for the neighbors, and profiting because he's ignoring regulations. It's profiting off the backs of other people, so he's more like a leecher than any Ayn Randian hero.

johnbpetersen 13y ago

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

jeiting 13y ago
Two very different activities.
nico 13y ago
If you get away with that, you would actually be a disrupter, except not a particularly nice one. Currently the most successful people doing that are child psychiatrists and big pharma, but they convince the parents to buy the drugs for the kids instead. Government seems to be fine with this though, as well as most of society.
- johnbpetersen 13y ago
  well played

dllthomas 13y ago

"Business is a zero-sum game." I'd be surprised if he actually thinks this (though only mildly) - Some business activities are zero-sum, but in general business exists precisely because it's not a zero sum game.

hapless 13y ago
He's a criminal. Of course his business is zero sum. His profits and the consumer surpluses of his customers are balanced against the losses to society.
- dllthomas 13y ago
  The claim that his business is zero sum is tremendously more narrow than the one that was made. Even so, it's probably false. Very much criminal activity has a negative sum (eg, smash a window to steal a laptop). It's also perfectly possible for an illegal activity to nonetheless have a positive sum (legislators are imperfect, laws are necessarily generalizations, etc); though we shouldn't expect it in any individual case, I think it's most likely to be the case in a situation like this with a willing exchange of goods (where there clearly is a surplus for two parties).
- randyrand 13y ago
  His business is not zero-sum. It actually creates wealth. People that used to not be able to afford a visit to New York now can.
  - hapless 13y ago
    That is the consumer surplus for his customers. The criminal vendor and his customers are always individually better off, or else no transaction would take place. Society suffers from the externalities of a criminal business.
    - randyrand 13y ago
      Your logic is flawed. This business is not zero sum. It literally creates wealth. Your dollar now buys more than it did before. Taxation is zero-sum. Your dollar that you would have spent literally gets taken from you to be spent somewhere else. No wealth is created. Similarly, no wealth is lost when people evade tax - but we do have less for the government to spend obviously. Also, at a large scale "the customers" are the same as "society." Externalities are an important topic but what are those externalities? Fewer tax dollars, annoyed neighbors, that all I can think of. Both of those are easily solvable problems in a free market. Allow apartment complexes to choose if they allow airBnB. The benefit far outweighs the negatives. There are also positive externalities. We all benefit from sharing our resources. Air BnB should be legalized. That would also get rid of some of the externalities of crime, like paying for prison and enforcement of laws.

yetanotherphd 13y ago

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

trimbo 13y ago
Good point. Typically journalists would do something like "We will refer to him as Joe, not his real name."

nico 13y ago

I'm impressed by how much hate is directed in the comments to the guy in the article. Seems like a lot of people here are either jealous about this guy "hacking the system", or are just too self-righteous. Why not instead use the article (as it was probably intended) as a way to think and debate about things that are hard to agree on or that are hard to define? This caught my attention for example: "The Man Who Does Not Exist claims regulations that govern rental apartments are akin to drug laws. They are useless, unenforceable, and an affront to the general public.", and although I don't have a strong opinion about hotel regulation in NY (or elsewhere), I do agree that current drug laws pretty much only benefit government agencies (they get funding) and drug cartels (by artificially raising prices).

hapless 13y ago
I approve of the law as it stands. Hotel taxes and hotel regulation improve my quality of life. He breaks the law for money. As a result, I would like to see him punished. (As a secondary matter, he is loathsome for defrauding his landlords -- renting out space to be used as a hotel is a much higher-risk proposition than a long term residence)
- nico 13y ago
  Except there is a debate now, because hotel law was not created to regulate people renting out their places. So now people on both sides need to agree on a solution, given it's not clear whether hotel laws apply directly to people on Airbnb or not. This is a similar (if not the same) issue that Uber/Lyft and similar companies are facing with current regulation all over the world. Slavery was legal in the US for a long time, and a lot of people were fine with it. Does that mean it should have stayed that way?
  - hapless 13y ago
    Hotel law was absolutely created to regulate people renting out their places. The early working-class hotels were owner-occupied tenements with short leases. Hotel regulation was written with that picture in mind. And I simply cannot believe you compared hotel regulation to the institution of slavery. It is not just in-apt, it is totally inappropriate. You should feel ashamed of yourself.

zachrose 13y ago

"According to NYC Research and Analytics, the average price for a hotel room in New York City is $281 a night. That’s for all five the boroughs. In Manhattan, it’s hard to find a room for under $350. Add that hefty 15 percent tax and lodging in Manhattan is an activity for the 1 percent." Yes, hotels in Manhatten are expensive, but calling it an activity for the 1% is a stretch. The rhetoric of 99%/1% was in response to 1% of US earners taking 20% of total income, at an average of like $400,000.

psn 13y ago

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

alanctgardner2 13y ago

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

marquis 13y ago
There are a few places listed, for example in California, that are actually registered as hotel/hostels and pay city taxes and advertise multiple rooms. Though, I don't see they should be on AirBnB in the first place (my view is that if you are a business you should not be on AirBnB).
- _delirium 13y ago
  As an AirBnB user I would really like a way to at least filter such places out of my searches. When I rent on AirBnB I want to rent from an individual who lives in their home; I see it as basically couchsurfing but with money and (often) nicer accommodations. If I wanted to rent a hostel bed or a room from a vacation-rooms-for-rent agency, I'd be on another site. I basically treat them as spam in the search results.
- mahyarm 13y ago
  Best buy also lists on ebay.

marquis 13y ago

>Current laws, for example, include a tax that goes directly to the Javits Convention Center — a place scant numbers of New Yorkers have ever visited. And yet which brings thousands and thousands of visitors to New York (with spending and lodging money) yearly. Move the Javits Center to Jersey and the surrounding hotels, restaurants and immeneties suddenly have very little reason to be there.

bbanyc 13y ago
In theory that's how convention centers should work. In practice, the Javits Center is isolated by the surrounding railyards and few desirable amenities have sprung up in the area. (This may finally change in a few years' time with the opening of the Hudson Yards redevelopment and the western extension of the 7 subway - so of course it's been proposed to tear down Javits and build a new convention center at the even more isolated Aqueduct Racetrack site. Ugh.)
- marquis 13y ago
  Ah, I didn't know it was proposed to relocate. What would be the benefit to having a convention centre away from built-up areas where it's even harder to get to (or get away from..)

ErikAugust 13y ago

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

bluepool 13y ago
Which is the core of entrepreneurship: Deliver something at a price that is more than what you paid for that thing.

Lucadg 13y ago

I've been making tourist apartments available online since 2001, long before Airbnb (a competitor for me) even existed, and I never heard anyone in any city ever complain about tourist apartments, be it Prague, Venice or Paris. What happens is that a certain, usually small, percentage of residential apartments is made available to the tourists. Each apartment means about one/two less hotel rooms. Hotel rooms take space too, they are not floating over the city. They often replace old residential buildings to build hotels effectively taking away space from residents who are pushed out of the city. So we may say that tourism takes space in the center, not apartments. I didn't hear much complain about this neither, as tourism brings money and, if anything, they want more of them. It seems to me that NY has a very specific situation so Airbnb may be actually harming the residents, I don't know, but in general Airbnb is not doing anything particularly new in Europe, where apartments for short term rent have been existing for long time. The hype is all about "rent from another human being" but the reality, and I guess most of their business in Europe, is simply providing a better platform. Maybe NY regulators could look at Prague or Croatia to solve the problem. [edit: formatting]

wcummings 13y ago
Housing in NYC is definitely a special-case, people should keep this in mind when discussing AirBnB
modfodder 13y ago
I believe, imho, that the issue has exploded because AirBNB is a Silicon Valley backed company, and the worry is with explosive growth and scale. It's not a big problem when a miniscule amount of the apartment stock is tied up as short term rentals, but it can become a huge problem as that percentage grows. The public and our representatives in government are more internet savvy too so these issues (or at least the stories) bubble to the top more quickly. As a resident in NY and I can appreciate the ability AirBNB gives me to rent out my apartment easily (I haven't). But I also see that "The Man That Doesn't Exist" is "stealing" apartment stock for hotel use, which drives up my cost of living as a renter (on the flipside, his "theft" of the apartment would be beneficial to me if I was an owner, driving up the value of my property).

nlh 13y ago

I don't think AirBNB actually claims this guy doesn't exist - that's a clickbait gimmick. What they do claim is that he's in the minority, which I believe is true. I'm an AirBNB host in NYC and I know a lot of other people who are too. We're all exactly the kind of people AirBNB wants -- we have places that occasionally are available/empty, and AirBNB has become a great way for us to make a few extra $$. I personally don't make a dime of profit off my place (I do, however, offset a good portion of my rent). I know the bad actors exist, and I know we do need some form of compromise between "No AirBNB!" and "AirBNB free-for-all". Not sure what the perfect solution is just yet, but I m confident a good one can be found.

hapless 13y ago
The good compromise already exists: * Sub-leasing is legal in NYC, for medium-term rentals. You are free to sub-lease your place during your month in europe, you are not free to sub-lease it nightly to transients. * Owner-occupied Bed-and-Breakfasts are legal, but carefully regulated. If AirBnB restricted itself to listings in these two (completely legal) categories, no one would object to them.

RubberSoul 13y ago

If you're going to break the law, why go to the trouble of forming a Delaware LLC? Won't that draw more attention to the operation and result in double taxation? Doesn't it also mean breaking Delaware law by forming a corporation for illegal purposes? Title 8, Chapter 1 says "A corporation may be incorporated or organized under this chapter to conduct or promote any lawful business or purposes..." Furthermore, he takes all these steps to avoid 15% hotel tax, but pays 30% on the LLC profits and then pays income tax when he takes earnings from the LLC? Am I missing something here?

stefan_kendall 13y ago
LLCs aren't double taxed. Or S-corps.
gojomo 13y ago
The LLC can be taxed as a pass-through/partnership... meaning no double-taxation. Any income taxes are only on net income, while I believe the hotel tax is on gross revenues.
gamblor956 13y ago
No you're not. It's another arbitrage play. He's creating the LLCs to cap his legal liability for each rental unit while at the same time trying to get the benefit of pass-through taxation benefits (meaning, no corporate level income tax but also meaning that all of his income is subject to gross taxation). In practice, it probably wouldn't work. LLCs are subject to a lower veil-piercing threshold in New York than corporations are (though the requirements are otherwise generally the same), so the LLC will do little to protect him legally, especially since he's violating Delaware's laws regarding the formation of the LLC. He's also most likely using this structure avoid attracting unwanted attention, since one of NYC's avenues for tracking down AirBnB offenders has been to compare corporate filings with rentals offered on the site.

asveikau 13y ago

> Current laws, for example, include a tax that goes directly to the Javits Convention Center — a place scant numbers of New Yorkers have ever visited. > “Why are they entitled to a cut?” he asks. The hotels may pay the tax, but I believe the idea behind this sort of arrangement is that they would take this into account when pricing rooms. So effectively, out of towners pay the tax when they get a hotel room. Even if you ignore the other benefits the city and its businesses get from out of towners passing through, the question being asked here is: why does money paid by out of towners go into something that benefits out of towners? Of course I agree with others that this story is at least embellished, too much of this guy's history seems like goofy fantasy. (Paying homeless people to purchase iPad 2 for export, really?) So this question being asked probably reflects the author more than it does the interview subject.

xacaxulu 13y ago

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

7Figures2Commas 13y ago

> After dropping out of college, the Man took a job in high-frequency trading when he was 20, where, he claims, he made a killing. > Thus far, he's found two properties that fit the bill. He charges around $500 a night for the first one; this second one is set to launch in the coming weeks with a similar price tag. He’s received funding from outside investors... Parts of this story seem odd. If the Man Who Does Not Exist made a "killing" in finance, why exactly does he need or want investors for this venture? It sounds like the investment required is relatively modest and would quickly be recouped. And I can't imagine that increasing the number of people formally involved in his illegal enterprise will be to his benefit when, for one reason or another, the gig is up.

webmaven 13y ago

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

grellas 13y ago

I am intrigued by the antipathy that is often expressed toward Airbnb in the very circles where technological changes is heartily approved. Much of this antipathy is centered around the issue of persons who use the service to circumvent local laws and regulations governing hotel and rental units, with the complaint being that illicit profiteers should be suitably punished and (impliedly) so should those whose services allegedly abet them. This piece makes that complaint without stating it directly dramatizing the fact that such a person is there, in the flesh, exploiting the system, while stating that Airbnb wants to deny his existence. Legally speaking, Airbnb is like YouTube and similar services in offering a service that is perfectly legal to do in proper cases and that can be done today to the immeasurable benefit of many in ways that could not even have been dreamed of in the pre-internet age. When the service is used legally and properly, it transforms how millions of people do things in their lives and does so for the better: in YouTube's case, as an outlet for video display and in Airbnb's, as a way of helping all sorts of people make more efficient use of their residential holdings. When the service is misused, however, others can be hurt: in YouTube's case, with persons posting and potentially profiting by infringing the copyrights of others; in Airbnb's, with persons attempting to circumvent laws regulating uses of commercial rental space. In each case, there is legitimate reason for many to complain of the misuses because they hurt people and people react to being hurt, and the law has measures in place to punish the direct malefactors in various ways. Yet what does this mean, legally speaking, for the provider of a lawful and, indeed, exceedingly useful service that is seen to profit in part from the activities of those who not only use their service legally but also from those who do not. When you get to such cases, you arrive at the intersection of law with public policy. Unless one is to bar technological progress and the change that it brings altogether, one must devise rules to address the illegal uses that are bad while preserving incentives to promote the technological progress that is good. In the case of YouTube, this was done through DMCA, which (whatever its other problems) did a pretty good job of setting up safe harbors that enable services such as YouTube to continue to do what they do without incurring liabilities for the wrongs of malefactors while at the same time requiring them to build in safeguards to protect the rights of those who might be hurt by their wrongs. This was not an easy task and even today the courts are sorting through the frictions occurring at the edges. But, though not perfect, the law has set up fundamental rules that, in the end, have managed to curb a good number of the wrongs while enabling a worthwhile service to survive and prosper. In the case of Airbnb, the fights are occurring at the local level and are at an early stage. As the players sort through the policy issues, though, the same sort of primary issue needs to be addressed as happened with YouTube in the video streaming area: how can the rights of victims of third-party wrongdoers be protected without barring or significantly impairing the new-found value for many in using a great new service wrought by technological advances (and, of course, by the skills and talents of those who have built the service)? I don't know the New York rental market at all and have nothing to say about how the issue is best resolved for the various persons affected by Airbnb's service there. I sense intuitively, though, that things like "15% across-the-board tax" are innately retrograde solutions that would serve to choke the beneficial and legal side of the service. Occasional users really are not in the business of providing hotel lodgings and it is a pretty big leap to say that they should be required to pay taxes as if they were. Or to require them to be subjected to liabilities and risks in ways that hotels are. These "solutions" are really just a way of governmental regulators, should they adopt the, acting on behalf of some narrow lobbing interest or other to choke a service that benefits countless others. They are overkill and would be the same as if Congress, at the federal level, had passed laws saying that YouTube-style services should be banned because they can facilitate copyright infringement that hurts others. That sort of "solution" would have been folly in our digital age and so too would any overkill-style governmental solution affecting any beneficial and innovative technologically-driven service that can come about by linking what people have to offer with what people need to use, and that includes Airbnb. Many other such services can easily follow (the "Airbnb for food" or the "Airbnb for whatever"). Do we really want to choke off the great benefits that can come from all this just because third-party abuses can arise. The key to all this is to deal with the abuses while preserving the values conferred by the new services. If there is antipathy toward the wrongdoers, there is no basis for directing this to the innovators themselves. Why this should be happening among those who otherwise favor technological change is something that really baffles me. I for one commend Airbnb for what they are doing and for the benefits it can bring to many. If they make fortunes out of it all, so much the better. The potential third-party abuses do need to be dealt with so that innocent people are not harmed. But they need to be dealt with in narrow ways focused on the actual problems, not in blunderbuss fashion that is short-sighted and, in the long run, harmful to us all.

x0054 13y ago

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

anon4 13y ago

What's so hefty about a 15% tax? Just pay the city the 15% and pocket the rest. If you need to, raise the price a bit. Assuming your rent is 500$/month, to give one room to some random person for a night you should charge them 20$/night to offset your entire rent for that day after deducing the city tax. The person in the article charges 500$/night. In that case you can even charge 50$/night and make money on top of having enough to pay rent. In no case would you need to charge more than a hotel - you both pay 15% tax, but you don't need to pay a whole hotel's worth of workers for that room's upkeep.

exhilaration 13y ago
There are other issues, in many jurisdictions being a legally zoned hotel requires things like sprinklers that the average AirBNB lister might be unwilling or unable (in the case of a renter) to invest in.

CamperBob2 13y ago

The Man Who Does Not Exist tells me he is a libertarian, an Ayn Rand disciple, and, in the parlance of Silicon Valley, views himself a disrupter. Business is a zero-sum game... It would be so nice if journalists who write about "Ayn Rand disciples" would actually read something by her first, so they would know what they're talking about.

jasonwocky 13y ago
Why? Assuming he's being truthful, all he's reporting is what the Man claims.
mcguire 13y ago
Unfortunately, it's rather difficult to tell the difference between real Christians and those who merely say that they are Christians.

rajacombinator 13y ago

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

yetanotherphd 13y ago

There seems to be some confusion about the term "externality" in this thread that I want to clarify. Not every effect that a person has on someone else is an externality. In general, externalities are direct physical impacts you have on others. In this case, noise is a good example, though the general "vibe" of having strangers moving in and out, and the risk of violence from these people, assuming it is higher, is also an externality. On the other hand, anything that operates via prices is never an externality. If AirBnB increased demand for rental housing and therefore raises prices, this wouldn't constitute an externality. The ethics of free market economics basically states that the government should regulate externalities, but if someone is only effecting you via market prices, that's your own problem. Another kind of externaility is network externalities. Even though pricing residential housing out of the market isn't itself an externality, there may be a network externality associated with residential housing which means that the market wouldn't provide the optimal balance of residential housing and hotels (even if there was no noise issue). Because of this, the government may also want to intervene by restricting the total amount of hotels. However, I doubt this is a big factor in real life since the demand for hotels is clearly much smaller than the demand for residential housing (who spends more than a tiny fraction of their life in a hotel?)

e12e 13y ago

So, he rents out an apartment for 500 a night, while an average hotel room is 281 -- or 244 ex 15% tax. His 500 with added tax is 575. Essentially this is in the same price range? Am I missing something? So, he makes an extra profit dodging taxes (as he did by dodging VAT by smuggling ipads). Well, surely it isn't news that crime does pay, as long as you can avoid getting caught?

microcolonel 13y ago

Why should these restrictions even exist in the first place? People claim it's about recourse, but that's what review sites and extensive contracts are for. The author(s) of this drivel obviously want to paint this man in 50+ shades of dark grey and blood red, but really is there anything wrong, morally, with what he's doing, what is the purpose of the law other than to retroactively add value to the investments of people who could already afford to offer housing like this, and increase the barrier to entry for those who couldn't?