Kiki co-founders Jack Montgomerie (left) and Toby Thomas-Smith, pictured in New York in 2023.
Kiki co-founders Jack Montgomerie (left) and Toby Thomas-Smith, pictured in New York in 2023.
Auckland-founded “peer-to-peer subletting” start-up Kiki (formerly EasyRent) is pulling out of its only market – New York.
The firm – valued at US$23 million ($38m) during a 2023 funding round – says it’s been collateral damage in the city’s war on Airbnb, a service it accused of pushing up rents.
“We have a big update for you: in short, due to regulatory uncertainty, we’re shutting down our NYC operations and launching in a new city soon,” co-founder Toby Thomas-Smith wrote in a June 18 email to backers, sighted by the Herald.
“The current short-term rental laws were developed to target behemoths like Airbnb and Booking.com to stop people from buying up entire buildings or multiple investment properties and turning them into illegal hotels, displacing locals in the process,” Thomas-Smith wrote.
“Unfortunately, the city is grouping us in this bucket.”
The Mayor’s Office of Special Enforcement had required Kiki to remove all of its sub-30 day listings, leaving it without a viable business in the city, Thomas-Smith said.
“We’re not in a financial position to continue to work with the city on a solution that will work for us and for them, so we are making the tough decision to leave New York and go to a city where we can actually help people and build what they want and solve this problem,” he said.
The as-yet-unnamed new location will be Kiki’s fourth reboot after setting up then closing shop in New Zealand, Sydney and now Manhattan.
The controversial start-up’s investors include Blackbird Ventures – which in 2023 led a US$5.3m seed funding round at a US$23m valuation via its New Zealand and Australia funds.
Thomas-Smith and Montgomerie relocated from Auckland to Sydney, before setting up the latest version of their service in Manhattan.
Blackbird – Australasia’s largest venture capital firm – took a 16% stake in the process.
Kiki began in Wellington in 2020, where Thomas-Smith and co-founders Jack Montgomerie and Alex Nicholson pitched it as a platform for landlords to rent properties short-term over the summer months when students temporarily left town.
Stunts like Thomas-Smith stripping down to branded underwear on TVNZ’s Breakfast helped to generate free publicity.
In 2022, Kiki set up shop in Sydney as a more general subletting app. At the same time, it folded its New Zealand operation. Thomas-Smith said the start-up’s full attention had to be on its new home across the Tasman.
The following year, with Blackbird’s money in their back pockets, the trio of founders hit New York.
Their Sydney business was “paused” – with a 420-person boat-party finale – at the same time.
Thomas-Smith said it had been a success, but all their focus had to be on the Big Apple.
Thomas-Smith said Kiki had been tweaked again, this time to what he described as a “Hinge-meets-Airbnb” service to match landlords with the right short-term renters. Blackbird called itself “peer-to-peer subletting”.
The company found itself in a social firestorm in January 2024 as Thomas-Smith posted that the all-male founders, known for their brash humour (the strip-down-to-underwear jape was repeated on a New York subway) had created “the first girl’s club in NYC” for women who were new to the city.
Blackbird stuck by Kiki. “As we all know, start-up founders experiment and learn and sometimes adjust as they go,” partner Samantha Wong posted at the time.
The controversy cooled, but few New Yorkers signed on. Thomas Smith said in his June 18 email to investors that the firm had US$120,000 in “booked revenue” for the 13 months since its “relaunch”, with 756 people using its service to sublet a property from one of 480 hosts.
A Smart Company report said Kiki’s first-year-in-New York performance was “far below its original projection to reach US$2.5m in monthly revenue and fill 31,000 homes within the first year”.
A rent guarantee initiative introduced in late 2024 also cost the company US$13,000 in a single month, Smart Company said.
And there was another problem, as the Herald noted during the “girl’s club” controversy – New York City’s long-time feud with Airbnb.
In 2023, the city had based Local Law 18, a regulation that made sub-30-day rentals difficult, and required all hosts to register with the city. Many Airbnb hosts found the new hoops too hard to jump through and quit. Thomas-Smith said his start-up was in a “regulatory grey area” but chose to stick it out – at least until this week.
Blackbird still in the fold
Blackbird is, again, standing by its men, although a spokeswoman would not comment on the current size or value of its investment.
“Venture capital investing by its nature requires a long-term perspective and building early-stage companies is not often a linear process,” the spokeswoman said.
“The company has had its challenges, but our experience is that it’s normal for start-ups, particularly marketplaces, to iterate and look for new markets and new ways of operating.”
In 2023, Thomas-Smith told the Herald that by 2025, ”Airbnb will try to buy us. And I’ll say ‘no, we’ll buy you’.”
That ambition could still be reached, but the founder is now in serious overtime.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
