Rent is Due
Airbnb
As travel restrictions lift around the world, hospitality companies are banking on a surge in vacationers. Airbnb, the quasi-legal flophouse rental company, has received some bad press for high fees:
"We gotta stop airbnb," one person tweeted, including a screenshot of the fee breakdown for a two-night rental: $198 for the room itself, $413.95 total.
[…]
Airbnb responded in a blog post explaining its fee structure, saying that hosts set nightly rates and cleaning fees, that the company typically charged a service fee of about 14%, and that local governments often charged taxes (similar to other hospitality businesses).
Anyone who has stayed in a hotel in New York is intimately familiar with hospitality fees - city taxes that usually get added on top of the advertised nightly rate. So why are people suddenly mad about Airbnb charging all these extra fees? Because they didn’t used to:
For years, Airbnb didn't collect lodging and other taxes on behalf of its hosts, operating in a legal gray area and aggressively fighting local officials' efforts to tax Airbnb listings like hotel rooms, most likely causing cities to lose out on significant tax revenues as hosts may not have paid those taxes on their own.
As regulators have sought to crack down, Airbnb has entered into "voluntary" agreements with many local governments, promising to collect taxes on behalf of hosts, which is why customers may have seen higher taxes on more listings over the years.
Part of the reason Airbnb was a cheaper alternative to hotels was that it didn’t have typical hotel overhead - while hospitality fees are annoying, they help ensure guests are safe and hotel operators are following the law. Laws also protect consumers from scams:
But as [Airbnb] has grown, it has had to wrestle with more instances of scam and low-quality listings, as well as guests trashing listings and hosting illicit parties, some of which have turned deadly.
There’s also the very real problem that Airbnb is driving up rent and housing costs in cities. Don’t worry though, the guy running the company has a solution:
[CEO Brian] Chesky says that nearly a quarter of Airbnb bookings are “long term,” or 28 days and longer. “Millions and millions of people” are staying and living at Airbnb listings on a monthly basis, he says, and in cities like New York, that figure is more like 60 percent. He views this as a a shift from travel to “living,” which has been propelled by people “discovering they do not need to be tethered to one location to live and work,” per the company’s latest earnings report.
I…don’t know, man. I would posit that 2020 and early 2021 were not indicative of normal travel and rental behavior. He also thinks that renting an apartment will soon become like a…streaming service?
“I think eventually in the future people will start paying for rent the way they pay for cable television, or for Netflix, you pay on a month-to-month basis,” he says. He didn’t mention how this could impact tenants, like those who prefer long-term rentals because it locks in their rent at a set price and offers legal protections. The idea is that more people are going to want flexibility and the ability to parachute into a destination and live like a local. Chesky says that Airbnb has dealt with evictions and squatters in the past and hasn’t found any “intractable issue” that can’t be handled.
This is not a thing. I don’t know anyone who wishes renting an apartment came with less legal protections. Also, they aren’t offering improved protection for property owners:
That shift to long-term rentals doesn’t mean the business is changing how it vets guests, though. It won’t make renters prove income, submit a credit score, or leave a deposit of first and last month’s rent for longer stays, like traditional landlords require.
“I think that’s all anachronistic and going to eventually go away,” Chesky says, pointing to Airbnb’s prepay model as secure enough backing.
“So almost all this old system of renting, you don’t need to do anymore,” he says. “That is stuff that was invented before the technology allowed almost all this to be automated. It’s like using a rotary dial phone, suddenly we have smartphones.”
He says Airbnb’s Trust and Safety team is “more sophisticated” than what landlords use and that eventually, people will prefer not to sign one-year leases.
I really just cannot. If Airbnb were a normal hospitality company it could spend time focusing on improving the quality of its service or acquiring more properties or whatever legal hotels do, but because it’s a tech company its shareholders expect the CEO to go on CNBC and talk about how they’re going to reinvent renting with AI.
Tesla Energy
Tesla doesn’t only produce cars - they’re also in the battery and solar panel business. The Tesla Energy brand sells solar panels and a “solar roof” product that has come under scrutiny after the company announced massive price hikes earlier this year. Those who were lucky enough to have their solar system installed pre-hike have struggled to get support from Tesla Energy:
Insider spoke to 14 Tesla Energy customers who either have Solar Roofs or solar panels installed by Tesla. Nine of them described disappointing customer service.
They said they were left in the dark for weeks on end, ghosted by their dedicated "project advisors," or sent in dizzying circles around Tesla's online and phone complaint systems, sometimes leading to long delays when their roofs didn't work properly.
Elon Musk has made a fortune announcing exciting-sounding projects - like an inexpensive solar roof with a $100 deposit - and failing to deliver on his promises. In this case, a failure to invest in proper customer service - or to have a workable business model - is leaving homeowners with eye-popping installation quotes, broken solar arrays, and leaky roofs.
Fake Elons
As if the real Elon wasn’t causing enough problems:
Dozens of consumers who were scammed by Elon Musk impersonators taking advantage of the recent cryptocurrency mania are begging the Federal Trade Commission for help getting their money back.
Since October 2020, consumers have reported losing more than $80 million to crypto-investment scams, according to the federal agency. Many of the schemes promised that a celebrity associated with cryptocurrency would multiply and return any coins the consumer sent to their digital wallet. The losses to Elon Musk impersonators alone have exceeded $2 million.
Elon is not going to stop talking about crypto, or tweeting things, or manipulating markets, so the safest way to avoid being taken by a fake or real Elon Musk is to mute his name on every social platform and try to ignore his existence.
Oh, and the Supreme Court recently took away the FTC’s power to reimburse victims - thanks to our old friend Scott Tucker - so I wish these crypto victims luck.
Scam Audiobooks
Amazon sells a lot of fake and scammy stuff. They’ve been punished for fixing e-book prices. It turns out scammers are also using Audible’s Audiobook Creation Exchange (ACX) to create scam audiobooks:
The book is gibberish in the purest sense of the word. It reads like it was written by a broken AI trained on the paranoid ramblings of Alex Jones. The author is listed as Joseph Smith, the long-dead founder of Mormonism.
There are loads of books like this floating around the outskirts of the internet, and it’s hard to tell why or where they come from – they could be strange published experiments of some kind, but often they seem as if they’ve been written by bots.
Why create audiobooks full of gibberish? For years, the scammers were creating books and listing them on ACX with a “royalty split” deal - meaning narrators who recorded the scam books would only be paid if they sold. Sales weren’t the goal, however:
These junk books are a hangover from Amazon’s original marketing strategy for Audible, which accidentally incentivised the proliferation of twaddle. When it launched in 2011 – and right up until March of 2020 – Audible would give out up to 200 promotional codes to anyone who completed production on an audiobook, no matter what the content. These codes could be given to members of the public, who could listen to the book for free, and Audible would pay out a royalty whenever a code was redeemed.
So the scammers would get codes with cash value, stiffing the narrator. The weird content had side effects for the people who signed up to read it:
“It’s a crazy, crazy issue,” says Anneliese Rennie, a well-established narrator, whose name is a pseudonym. “A narrator posted [on Facebook] just yesterday that they had spent the last two years building their career on these kinds of books. And they did, I want to say, well over 100 of [them]. They posted about how depressed they were. They posted about how much it had affected their self-worth and their ability to continue.”
Amazon’s general disinterest in policing its massive publishing platforms leads to all types of abuse. We can now add “scam audiobooks full of gibberish” to the list.
Adam Neumann
You are probably sick of reading about Adam Neumann, disgraced co-founder of WeWork. I am sick of writing about him. We may be in luck, because it seems he’s finally reached a buyout deal with Softbank:
Securities filings from earlier this month show WeWork in February gave Mr. Neumann an enhanced stock award worth roughly $245 million, a benefit that wasn’t extended to other early shareholders and hasn’t been previously reported.
The deal was part of a renegotiation of the former chief executive’s giant 2019 exit package meant to end a long-running dispute between him and SoftBank and help clear the way for a public listing for WeWork, according to people familiar with the matter.
In addition, the final package gave him nearly $200 million in cash, let him refinance $432 million in debt on favorable terms and allowed an entity Mr. Neumann controls to sell $578 million in WeWork stock.
Lord. You know what? Good for him. Softbank is hardly a sympathetic character - I write quite often about their investments and the damage they cause. Neumann making off with a billion Softbank dollars doesn’t bother me. If he didn’t, someone else would. I hope he blows it all on surfing lessons.
Really I just wanted to quote this excellent passage:
Executive-severance experts said the package stands out not only for its enormous size, but also given Mr. Neumann’s record. The valuation of WeWork, which he co-founded in 2010, fell to around $8 billion when he left from $47 billion in early 2019. In all, WeWork has raised more than $11 billion to build a company worth $7.9 billion, not including debt.
“Generous would be an understatement,” said Conor Callahan, a management professor at the University of Illinois at Chicago who studies severance packages. “It’s going to be something people are going to be very upset about.”
If you were an “executive-severance expert” how would you look at this situation? Did Neumann take a $47 billion dollar company and destroy $39 billion in value? Did he create an $8 billion dollar company with $11 billion in investment? Did he only lose $3 billion of investor cash? Why do executive-severance experts exist? So many questions.
I mean…$7.9 billion (not including debt) is more than $0, but I still think it’s quite likely Neumann will be one of a small handful of people to make money off WeWork. People (expert or not) can be upset all they want, but Softbank and other investors agreed to the ridiculous terms that allowed the guy who lit billions of their dollars on fire walk away with a 10 figure payday.
If you want to know more about Neumann’s…management? of WeWork, I recommend the excellent Billion Dollar Loser.
Short Cons
Bloomberg - “He’s 44, cocky, blunt, and seems like the kind of guy who’d take pleasure in calling BS on current stock market hype—if he wasn’t the one behind it.”
ProPublica - ““There’s no farming here: We’re a sandbar, for Christ’s sake,” said Mancini, reached by telephone. Mancini said that he had no cows at his home, just three dogs.”
Consumer Affairs - “The recent Geico data breach has turned out to be worse than originally thought. On top of customers’ driver’s license numbers being exposed, a new report says that Geico now believes that hackers could use that information to fraudulently apply for unemployment benefits.”
Bloomberg - “Wrigley cited the sale of “Medicated Skittles,” “Starburst Gummies” and “Life Savers Medicated Gummies” as examples of what it said were trademark infringement and dilution, and unfair competition.”