Airbnb is the third-most valuable startup today at $25.5 billion, and the now ubiquitous home rental service wants to be nothing less than the hotel-substitute glue holding the global middle class together. In 2015, staring down messy political fights in San Francisco, New York, Paris and elsewhere, Airbnb began getting louder about that keeping the middle class in their homes line.
Next year, Airbnb is preparing to do more of the same as its political battles heat up.
A different set of city supervisors could pose a challenge in San Francisco. New York City Council members and the state’s attorney general have made their Airbnb frustrations very well known. In France, hotels killed an Airbnb partnership with the country’s rail service.
That said, Airbnb has made significant strides in markets as varied as Jersey City and Amsterdam. President Obama continues to namecheck Airbnb and other “sharing economy” darlings repeatedly. And although its “sharing economy” evangelism often came across as callous and disingenuous, the story of Airbnb in 2015 was mostly one of momentum and acceleration.
In 2016, Airbnb will likely continue to dominate; it will continue to ink partnerships with regulators and maybe even raise more money. But as 2015 comes to a close, the political struggles of the last few months indicate that whatever success Airbnb has in 2016 won’t come easily.
Proposition F Sets the Stage
On Nov. 3, Airbnb successfully beat back Proposition F, a San Francisco ballot initiative that would have more tightly regulated the home rental service.
For Airbnb, it was a resounding victory by a 10-point margin. Though a key supporter of tech industry ally Mayor Ed Lee lost a pivotal City Supervisor race, the Proposition F battle was viewed by many as vindication of what Airbnb has been saying all along: Cities are getting more expensive. We help middle-class residents stay in their homes.
After the vote, Airbnb policy boss and ex-Clinton administration adviser Chris Lehane outlined a political organizing operation that would be unparalleled in Silicon Valley. Mimicking what the company did in San Francisco, Airbnb aims to turn people who list homes on its platform into its foot soldiers. Lehane said these new home-renting activists will form “home sharing clubs,” a strategy that he grandly compared to historic innovations in political and economic organizing, like labor unions, political parties and artisan guilds.
The immediate goal is one hundred such home sharing clubs by the end of 2016, with professional organizers paid by Airbnb to help out.
Beating Prop F cost the company at least $8 million, though we’ll know more about that in 2016 when the full campaign financials are released. Lehane declined to specify exactly how much the company is willing to spend on this global operation (“We’re gonna spend what it takes to succeed”).
New York, Airbnb Loves You, but You’re Bringing It Down
A week after the Proposition F battle, Airbnb’s tone changed a bit. The company unveiled its “Community Compact,” a public pledge to pay its taxes and work more closely with regulators to crack down on people who illegally operate hotel-like listings through the service. Most tantalizingly, the company said it would be releasing anonymized listing data, which a spokesperson said would be “so cities can see if we are walking the walk” when it comes to transparency.
At the beginning of this month, Airbnb followed through on its promise to release anonymized data. Reporters, researchers and others could view information about thousands of New York City listings at Airbnb’s New York headquarters, by appointment only. For anyone else interested, Airbnb offered a high-level summary of the data on its site.
The backlash to Airbnb’s announcement was swift and immediate.
Though Schneiderman’s office declined to comment, New York City Council members Jumaane Williams and Helen Rosenthal, representing Brooklyn and Manhattan’s Upper West Side respectively, issued a statement calling the data dump “useless.” The two said this data doesn’t help the city crack down on people who rent out multiple apartment listings — the de facto Airbnb hotels that violate the company’s own rules as well as the law.
Airbnb’s fight in New York City matters a lot more than its battle in San Francisco over Prop F; New York is several times as large as San Francisco, which means it is that much more important to Airbnb’s bottom line. And whereas the company was up against a disorganized, plucky activist class in San Francisco, Schneiderman and the City Council have much more political power and far less incentive to bend. Keep in mind, too, that San Francisco is now the most expensive place to live in the U.S. It’s entirely possible that Airbnb’s message about serving as an “economic lifeline for the middle class” had far less to do with its victory than the popular conception of Proposition F as an “anti-tech” measure in a city whose public life is completely dominated by the tech industry.
Questions, Questions, Questions
Airbnb’s efforts at transparency in New York obviously haven’t succeeded in the same way that its straight-up political push did in San Francisco.
Our sister site The Verge took a look at Airbnb’s released NYC data and concluded that “thousands of ‘whole units’ … were rented for six months or more during the last year,” which suggests that Airbnb is thinning the city’s already strained housing supply, and that a significant chunk of Airbnb’s revenue is generated by those “illegal hotels.” Plus, a recent Bank of America report suggests that Airbnb listings in a number of its biggest markets are, on average, more expensive than hotels.
In 2016, Airbnb will need to prove to regulators that it is not deriving huge chunks of revenue from people operating hotels through the service, or from listings that are effectively full-time Airbnb rentals. It will do this either by making compromises that regulators can live with (like in Jersey City, Amsterdam, London and so on) or by leaning on its burgeoning political arm to pressure regulators into living with Airbnb. While the status quo in cities like New York or San Francisco benefits Airbnb, changing political circumstances could force city officials’ hands.
And while spending $8 million or more to defeat Proposition F worked in November, can the company afford to put out the same expensive fires everywhere else?
This article originally appeared on Recode.net.