What Role Does Airbnb Play in Housing Affordability? The Danger of Microplastics, and Raising American Kids in the UK

0:00:06 Support for the show comes from Farragamo. When a product is made in Italy chances are
0:00:11 it’s well crafted and high quality and that’s especially true of Farragamo footwear. For
0:00:16 almost a hundred years the name Farragamo has been synonymous with luxury and all Farragamo
0:00:20 products are made sustainably with ethically sourced materials. Farragamo footwear is
0:00:25 designed to last so whether you’re hitting the city streets in a pair of classic loafers
0:00:31 or strolling the park in contemporary moccasins and sneakers you can do so in chic comfort.
0:00:38 Discover Farragamo’s timeless styles with a modern touch at Farragamo.com.
0:00:43 Support for the show comes from Mercury. Financial operations are needlessly complex with Mercury
0:00:47 you can simplify them with banking and software that power your critical financial workflows
0:00:53 all within the one thing every business needs a bank account and with new bill pay and accounting
0:00:58 integrations you can pay bills faster stay in control of company spend and speed up reconciliation.
0:01:10 Apply in minutes at mercury.com. Mercury the art of simplified finances.
0:01:14 Welcome to the PropG pods office hours. This is the part of the show where we answer questions
0:01:17 about business big tech entrepreneurship and whatever else is on your mind.
0:01:18 Hey PropG.
0:01:19 Hey Scott and team.
0:01:20 Hey Scott.
0:01:21 Hi PropG.
0:01:22 Hey PropG.
0:01:27 And last week’s office hours we answered your questions about China’s EV market how we run
0:01:32 our PropG media business and how to rich.
0:01:36 No one does China like China. I wish I had figured out earlier that my core confidence
0:01:41 is storytelling so this all sort of bubbled up to media company but I didn’t want to take
0:01:45 outside capital because I didn’t want to have the pressure of trying to get a return
0:01:48 on other people’s capital so I started PropG media.
0:01:53 If you get real money I mean if you get really lucky and I got really lucky later in life
0:01:58 in my kind of late 40s I think you do two things. One I think you spend like a fucking
0:02:03 50s gangster that’s just been diagnosed with ass cancer you spend a shit ton of money and
0:02:06 then anything above that I think you just give it away.
0:02:10 Today we’ll answer your questions surrounding the future of Airbnb, microplastics and raising
0:02:13 American kids in the UK.
0:02:14 First question.
0:02:18 Hi Scott. I’m Luke from Manchester in the UK and I’d like to get your thoughts on the
0:02:24 recent surge in regulations targeting short term rentals like Airbnb in major cities worldwide.
0:02:29 We’ve seen New York implement restrictions and Barcelona plans to ban short term rentals
0:02:32 entirely by 2029.
0:02:37 With housing prices and red skyrocketing in recent years, short term rentals are often
0:02:40 blamed as a major contributing factor.
0:02:45 Platforms like Airbnb have become easy targets for politicians and residents despite data
0:02:47 suggesting their impact is minimal.
0:02:51 For instance in New York where laws have been passed to limit Airbnb listings we’ve seen
0:02:56 little effect on rent prices but a noticeable increase in hotel rates.
0:03:01 It seems politicians find it easier to scapegoat Airbnb rather than addressing their own policy
0:03:02 failings.
0:03:06 But looking ahead, what do you think the future holds for Airbnb?
0:03:11 Does this wave of regulation pose a significant risk to their business model and should investors
0:03:12 be concerned?
0:03:15 Thanks Scott for everything you do. Keep up the great work.
0:03:20 A thoughtful question. First up disclosure. I’m a shareholder in Airbnb. It’s been my
0:03:25 largest position for a long time. I’ve sold it down a bit but it’s still a big position
0:03:26 for me.
0:03:30 I think the world of Brian Chesky, I think the company is the strongest brand arguably
0:03:35 in the history of travel, has network effects, something like two thirds or 80% of their traffic
0:03:41 is direct to site which means they don’t have to pay these onerous margins to travel sites
0:03:46 or Google who then, if you’re the Four Seasons you get some traffic to your site but you
0:03:50 get booked a lot through third party providers whether it’s an Expedia which does a great
0:03:54 job but these companies command a lot of margin. They’ll take a lot of margin on the fact that
0:03:59 Airbnb gets a ton of direct consumer traffic means they have better margins, they have
0:04:05 more hotel rooms and I think the three biggest hotel companies combined and it’s just an
0:04:07 extraordinary company, et cetera, et cetera.
0:04:14 With respect to its impact on housing stock and what is a real crisis in terms of affordability,
0:04:18 I do think they’ve been scapegoated a bit and that is if you want to talk about the
0:04:23 crisis of affordability not only in rentals but in housing, it’s pretty simple. We need
0:04:28 some sort of federal legislation or funding that encourages just more housing permits
0:04:33 and more construction because it has become so difficult to build housing in the US that
0:04:37 there’s just a supply-demand imbalance. We need, I think, another million to a million
0:04:40 to have units constructed every year just to keep up with household formation and when
0:04:47 you don’t have the supply, demand and prices accelerate faster than inflation and I think
0:04:53 what you’ve seen with a combination of housing that’s gone from $290,000 to $410,000 since
0:04:58 the beginning of the pandemic from 2019 to 2023 and you’ve seen those rates go from 3%
0:05:03 to 7%, that takes the average mortgage rate from $1,100 to $2,300 meaning that it’s no
0:05:08 longer 2/3 of Americans that can afford a home but 1/3. What’s the result? A lot of
0:05:13 young people I think have just given up on buying a home and they’re spending more money.
0:05:17 They’re just saying fuck it. Let’s get an Airbnb in Bangkok or let’s go to London and
0:05:23 see Taylor Swift. I think that’s bad. One, the thing I love about housing on a risk-adjusted
0:05:26 basis, it’s not a much better investment than other asset classes but what people don’t
0:05:30 take into account is it’s forced savings because people have a tendency to make that mortgage
0:05:34 payment. There’s a lot of older Americans with a majority of their net worth and the
0:05:40 retirement is in their house. My mom moved to Westwood in 1972. When did we move there?
0:05:44 Bought a condo for $72,000. Actually, her boyfriend bought it for us. He had another
0:05:49 family. Life is complicated. Anyways, we bought our condo or Terry bought us our condo for
0:05:55 $72,000 and then when my mom got sick with cancer for the second time, I said you need
0:06:01 to move and retire and her ability to do that was once she had a son who was starting to
0:06:06 do okay economically and could help but also she had a home that had gone from $72,000
0:06:13 in value to $350,000 because it’s a forced savings plan over 25 or 30 years. Housing
0:06:20 stock is incredibly important in terms of affordability, not only economically but psychologically.
0:06:25 It’s yet another reason why young people aren’t mating. Why? Because practice mating
0:06:29 or commitment is not only having kids, it’s not only getting married but it’s deciding
0:06:34 to partner on real estate and play house together. The first thing I did, not the first thing,
0:06:38 I did a lot of things before that but one of the things I did in my kind of evolution
0:06:45 towards monogamy was buying a house with a partner and starting to build a house and
0:06:50 think about building a future together and having a second bedroom and know what’s going
0:06:55 to go in there, something that’s small and looks, smells and feels like. I think housing
0:06:59 is just such an important role economically and psychologically and emotionally in people’s
0:07:03 lives. What you’ve had is the acceleration has been a function, I think just of supply
0:07:08 and demand and this rejectionist, exclusionary, bullshit culture we have where once we have
0:07:12 a degree or a house, we want to make it more difficult for other people to get a house so
0:07:16 we show up at the local review board and make it much more difficult for housing permits
0:07:20 to be issued. That shit needs to stop. If it’s regulation or subsidies, we just need
0:07:25 more housing built. In terms of Airbnb specifically, there’s just no doubt about it. In certain
0:07:29 areas, some of the rental stock has taken out of the market. I knew a woman who had eight
0:07:33 Airbnb, she would rent apartments, she was very savvy, fix them up and then turn them
0:07:39 all into Airbnb. So to think that that loss and rental stock did not impact the markets
0:07:44 would be naive. Having said that, what we have is a transfer of economic opportunity
0:07:51 and that is there is price hikes among renters. There’s a loss of economic value there, their
0:07:58 prices go up, but the prices go down for travelers or for short-term renters. Why? Because instead
0:08:04 of having to check into a bad day’s end for $289 a night, they can get a cool little studio
0:08:11 for 120 bucks in SoHo or in the East Village. So it’s a transfer of wealth and opportunity
0:08:17 from renters to travelers and short-term renters. Now, how do you solve this externality? I
0:08:21 think it’s pretty simple and I think Airbnb has been pretty savvy here and that is hotels
0:08:26 pay taxes. They pay extraordinary actually. If you look at your hotel bill, unfortunately
0:08:32 it gets jacked up because there are typically city and residence or hotel taxes that are
0:08:37 pretty serious. Now, if you wanted to make a real dent and Airbnb now pays those taxes
0:08:42 is my understanding. And what would you do with that additional tax revenue? Boom, you
0:08:48 figure out regulation or just general subsidies to increase the housing stock. But to lay
0:08:52 the increase in rental prices at the feet of Airbnb, you’re right, is a little bit
0:08:58 of scapegoating. It’s an issue. It is dust has caused a transfer and prosperity and economics.
0:09:03 I do think we need something to address it, but this is just a symptom of a much larger
0:09:08 problem. And that is we need a drastic increase in incentives and regulation to ensure that
0:09:14 there’s more housing stock. We have seen the quality of life go down for young people relative
0:09:18 to their peers. And for the boomers out there saying, yeah, but they still live an extraordinary
0:09:21 life with their Netflix and their Nespresso and their Coachella. Yeah, but that’s not
0:09:26 the way life works. They look up and they see people doing better than them. And for the
0:09:30 first time in our nation’s history, a 30 year old is no longer doing as well economically
0:09:33 as his or her parents were at the age of 30. And that shit needs to stop. Thanks for the
0:09:34 question.
0:09:35 Question number two.
0:09:41 Hi, Professor Galloway. I’m an MBA from class of 19. We briefly met in 17 at one of your
0:09:47 books findings. I’ve been a follower ever since. I’m curious if you’ve read up on the recent
0:09:53 headlines around microplastics and phthalates. In May, the news seemed to hit a new degree
0:10:00 of virality when microplastics were discovered in testicles. I guess it took that to gain
0:10:06 more attention. But for many years now, studies have been coming out around the negative effects
0:10:14 of microplastics that manufacturers and companies knowingly are putting in the products from
0:10:20 baby bottles to what we consume as adults every day. It feels like companies have failed
0:10:27 us along with governing institutions. So I have a question for you. How do you think
0:10:32 as consumers we can ensure the safety of what we buy and consume in the wake of this government
0:10:35 and action and corporate complacency?
0:10:40 So let me get this. I’ve got plastic in my testicles. I mean, this question wins for
0:10:48 the question I know the least about. Look, one thing I’ve noticed about London is that
0:10:54 everything rots. You buy orange juice, you buy cheese, you buy salami. And three days
0:10:59 later, it goes bad. And at first that kind of bothered me. And I thought, wait, that’s
0:11:04 a good thing because there’s something like 110 or 1200 preservatives and chemicals and
0:11:08 pesticides that the government of the UK or whatever the health ministry is there, the
0:11:14 equivalent of the FDA said, no, not here, girlfriend, this shit’s bad for you. And I like that.
0:11:19 When granted, it probably adds expense. And it’s easy for me to say because I can afford
0:11:25 these foods. But I do think that probably the only way around this is if in fact you
0:11:30 can impose or show peer-reviewed research that having plastic in your testicles is bad
0:11:36 and we can solve this problem through regulation. I think recycling is nothing but a misdirect
0:11:40 to convince us that we have some power over something. I think it was like calling people
0:11:45 alcoholics. It’s a disease and those people have a problem. So go ahead and drink. Well,
0:11:50 actually, the majority of us are not alcoholics, but the majority of us would benefit from
0:11:56 drinking less alcohol. So it’s a misdirect to create a segment of people that we think
0:12:01 are the problem and are weak and you’re not them, just as recycling in my view as a misdirect.
0:12:06 The majority of the research shows it’s nothing but a chance to virtue signal and feel better
0:12:11 about ourselves. And if that sounds harsh, okay, I think we need loss. I don’t understand
0:12:17 why we wouldn’t have a fairly substantial tax on any plastic and then take that money
0:12:22 and invested it either in figuring what you do with these plastics and the honest answers
0:12:26 I don’t know. I keep seeing all these new technologies of ships trying to pull all the
0:12:30 plastic garbage out of the ocean. And I don’t, I think it’s a losing battle, but there’s
0:12:34 got to be more environmentally sustainable packaging. I can’t, it’s funny as you get
0:12:39 older, the things you notice, I got, I forget what I got. I got a gift from somebody and
0:12:45 I opened, and there was so much shit in packaging. And I thought, Jesus Christ, all this for
0:12:52 whatever it was, I think it was a small fragrance, you know, Ude Musk, Ude Dog. That’s right.
0:12:57 The new fragrance from hell not to propagate. Anyways, I think it’s just got to come from
0:13:01 regulation and peer reviewed research showing how harmful plastic is and the notion that’s
0:13:05 showing up everywhere. But this is, it has to be a law. I don’t think it’s a consumer
0:13:11 led revolution. I think these people are very savvy at creating Mr. XC above recycling
0:13:16 and alcoholics, so to speak. I think it has to come from laws. We have one quick break
0:13:21 before our final question. Stay with us.
0:13:25 Support for the show comes from Mint Mobile. When it comes to saving money, the first place
0:13:29 you should look is your automated monthly expenses. And if you’re like most people,
0:13:33 your phone bill is probably burning up all your extra cash. If you want to get serious
0:13:38 about saving money this summer, ditch your overpriced provider and switch to Mint Mobile
0:13:44 and get three months of premium wireless service for just 15 bucks a month by switching. All
0:13:47 of Mint Mobile’s plans come with high speed data and unlimited talk and text delivered
0:13:52 on the nation’s largest 5G network. You can use your own phone with any Mint Mobile plan
0:13:57 and bring your phone number along with all your existing contacts. To get this new customer
0:14:04 offer and your new three-month premium wireless plan for just 15 bucks a month, go to mintmobile.com/propg.
0:14:11 That’s mintmobile.com/propg. Cut your wireless bill to 15 bucks a month at mintmobile.com/propg.
0:14:16 $45 upfront payment required, equivalent to $15 per month. New customers on the first
0:14:21 three-month plan only, speeds slower above 40 gigabytes on unlimited plan. Additional
0:14:27 taxes fees and restrictions apply. See Mint Mobile for details.
0:14:31 Support for Propg comes from Babble. So you want to learn a new language? Great. You have
0:14:35 a few options. You can uproot your life and move some more far away to get the full immersion
0:14:39 experience. But I’m guessing that’s not on the cards for you. You could hire a private
0:14:43 tutor, but that’s going to cost you several hundred bucks. Or you could try a language
0:14:49 app. But not all language apps are created equal. So you might want to try Babble. Babble
0:14:52 is a science-backed language learning app with lessons created by real people for real
0:14:57 conversations. Unlike other language apps, Babble doesn’t rely on artificial intelligence
0:15:01 to build its 10-minute lessons. Instead, their lessons were developed by more than 200 language
0:15:07 experts focused on teaching phrases and vocabulary you can actually use. One of our producers,
0:15:12 Caroline, tried Babble and she won’t stop speaking Italian. It’s really annoying. But
0:15:17 I guess that means the app worked. Here’s a special limited time offer for our listeners
0:15:26 right now. Get up to 60% off your Babble subscription, but only for our listeners at Babble.com/ProptG.
0:15:35 Get up to 60% off at Babble.com/ProptG spelled B-A-Double-B-E-L.com/ProptG. Rules and restrictions
0:15:45 may apply. Support for PropG comes from Vanta. Whether you’re starting or scaling your company
0:15:50 security program, demonstrating top-notch security practices and establishing trust is
0:15:58 more important than ever. Vanta automates compliance SOC2, ISO 27001, and more, saving
0:16:03 you time and money, while helping you build customer trust. Plus, you can streamline
0:16:07 security reviews by automating questionnaires and demonstrating your security posture with
0:16:14 a customer-facing trust center, all powered by Vanta AI. Over 7,000 global companies including
0:16:19 Atlassian Flow Health and Quora use Vanta to manage risk and provide security in real
0:16:27 time. Get $1,000 off Vanta when you go to Vanta.com/ProptG. That’s Vanta.com/ProptG
0:16:33 for $1,000 off. Welcome back, question number three.
0:16:39 Hey, PropG. This is Tom A.D. calling in from London. My wife and I are both American, but
0:16:42 I’m starting a business in the UK, so the plan is to be here for the foreseeable future
0:16:49 and raise kids. My question is, as a parent, what’s your advice on raising American kids
0:16:54 in the UK? Do you feel like they’re missing anything, not being in America or do you feel
0:17:00 like they’ll be culturally confused at all? I’m worried that my kids might have a weird
0:17:06 kind of identity crisis, if you will. Thanks for everything that you do.
0:17:11 First off, I think it’s great. And if you’re moving to the UK and starting a business in
0:17:17 the UK, that means, A, you’re already economically successful or you’re very confident and a
0:17:22 risk taker and economically viable. So, if you’re in a loving, supportive relationship
0:17:27 and have the confidence and the wherewithal to move to England with your kids, it means
0:17:33 you’re in a really good spot. And my thinking is in the rationalization for moving to the
0:17:39 UK was that what could we give our kids that would be amazing? And the idea of letting
0:17:44 them live in a foreign country for several years and experience a different culture,
0:17:48 I wish my parents could have done that for me. I think it’s just an extraordinary gift
0:17:52 what you’re doing for your children and they’re going to appreciate it the rest of their lives.
0:17:57 And you might decide, I couldn’t do better than my life in America. I didn’t want to
0:18:01 do better. We just wanted to do different and eventually we’ll move back. With respect
0:18:07 to kids, it’s been just a surprise to the upside. The schools, granted, I send my kids
0:18:10 to the American school in London and my oldest goes to boarding school at Wellington, his
0:18:14 home on the weekends, but he boards during the week, both outstanding schools. Also,
0:18:18 the public schools that my friends send their kids to are really happy. Granted, we live
0:18:23 in London where those schools are probably well funded, although I don’t know how finance
0:18:29 works in public schools. But my 13 year old takes the tube to and from school. We just
0:18:34 love that. Fairly independent here. I think there’s just no way to go around. In terms
0:18:37 of the identity stuff, I just wouldn’t worry about that. We’ve gotten really into Premier
0:18:44 League football. My kids still feel very strongly American. We spent a lot of time in America,
0:18:50 but like Britain is a wonderful democracy. We are allies. It’s probably our closest
0:18:56 ally, maybe Canada. I don’t know. I think that I think the bond between Britain and the
0:19:01 US is so strong that it won’t, it won’t in any way give them an identity crisis. It’ll
0:19:06 enhance their identity and make it a little bit more nuanced and a little bit more interesting.
0:19:11 I think you’re absolutely going to love it here. I think your kids are going to thrive.
0:19:18 We have loved moving to the UK. The weather not so much. The weather not so much. So their
0:19:23 father is constantly depressed and in a bitch of a mood from November to May where this
0:19:27 round thing goes behind the cloud, but Premier League football is awesome and the schools
0:19:33 are great. And what a wonderful place to be in that you and your wife have the opportunity
0:19:37 to bring your kids to a different culture, a wonderful culture for a few years. And some,
0:19:41 it’s just really good to be you, boss, and it’s good to be your children. This is a wonderful
0:19:45 gift for them. That’s all for this episode. If you’d like to submit a question, please
0:20:03 email a voice recording to officehours@prophgmedia.com. Again, that’s officehours@prophgmedia.com.
0:20:08 This episode was produced by Caroline Shagren, Jennifer Sanchez is our associate producer,
0:20:11 and Drew Burroughs is our technical director. Thank you for listening to the PropG pod from
0:20:16 the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice as
0:20:21 read by George Hawn. And please follow our PropG Markets pod wherever you get your pods
0:20:26 for new episodes every Monday and Thursday. The PropG Markets pod was number one in business.
0:20:30 I think it’s one of the best or most successful new pods in a while. We’re really excited
0:20:37 about it with my co-host, Ed Elson, the 14-year-old Irish person. Not sure he’s 26 and he’s British.
0:20:43 But anyways, please tune in to PropG Markets wherever you get your pods every Monday and
0:20:52 Thursday. By the way, if I have plastic in my testicles, I’m pretty sure it’s one of
0:20:56 those Evian bottles that you carry around after you’ve actually, oh, there’s my family
0:21:01 speaking of plastic in my testicles. Come on in guys, just talking about waste and how
0:21:03 it’s impacting my twins.