Airbnb And NY Attorney General Prepare To Meet In Court This Week

Airbnb will finally have its day in court in New York this week, as the first oral arguments related to a subpoena filed by the state’s Attorney General are expected to be heard on Tuesday.

Last fall, the Attorney General filed a subpoena for thousands of records related to hosts in New York in an effort to identify bad actors and illegal activity on the platform.

While Airbnb said that it is also committed to removing bad actors on its website, the company argued that the subpoena is “unreasonably broad” in the amount of information requested by the government, and filed a motion objecting to it.

On Tuesday, the two parties will meet in court to argue each of their positions.

At the core of the dispute are illegal listings that the NY attorney general claims make up a disproportionate number of listings on Airbnb’s platform. While there is a narrowly defined law that allows residents to rent out rooms in their own apartments, the state is looking to go after hosts who operate multiple listings as a sort of virtual hotel.

Airbnb claims that about 87 percent of listings come from hosts renting out their own apartments, in many cases to help them make rent. But a study completed by data extraction company Connotate in late January found that in New York Airbnb had 19,522 listings and 15,677 unique hosts.

While the majority of those hosts had just one listing, the study found that 1,849 hosts had more than one listing for a total of 5,964 listings. In other words, 12 percent of hosts made up about 30 percent of listings in the city.

The company says it has been working to weed out hosts running large-scale rental operations. Data compiled by the NY AG late last week shows that not are there still a number of hosts with dozens of listings, but that since the subpoena was filed last fall, many have actually heavily increased the number of listings that they manage.

One host going under the name USA Stay! has more than 130 listings on the platform, according to that data. Meanwhile, two hosts have added 30 new listings in the months since the subpoena was filed.

In a blog post and email sent to NY hosts today, Airbnb public policy chief David Hantman said the company would fight the subpoena in court this week. He wrote:

The judge in this case could issue a ruling on Tuesday, or take weeks or even months to make up his mind. He could rule in our favor, or against us. He might ask the Attorney General to narrow his demand. If we are ordered to hand over any data, we will work to ensure you are properly notified before the government receives any information about you or your listing.

Regardless of the outcome, Hantman wrote that the company would hold a community meeting Wednesday at 7:00 PM and a webinar the next day at 11:00 am.

Airbnb Has Closed Its $500M Round Of Funding At A $10B Valuation, Led By TPG

TechCrunch has learned that Airbnb, the fast-growing site that lets people become hoteliers by renting out sofas, rooms or entire private homes, has now closed its latest round of funding: $500 million, led by private equity firm TPG, at a $10 billion valuation, according to our sources. This brings the total raised by Airbnb to $826 million.

Negotiations around the funding were previously reported by the Wall Street Journal, which reported that TPG and Dragoneer Investment Group were leading the round, and that mutual funds including T. Rowe Price were also involved. Update: WSJ is reporting that it’s a $450 million round, same valuation, with Dragoneer, Sequoia and T. Rowe Price also named as investors.

We understand from sources that Allen & Co. — known for its recent work advising Facebook on its $19 billion purchase of WhatsApp, working on Twitter’s IPO, and helping Dropbox with its latest, $350 million round — has been helping to orchestrate this round for Airbnb.

The deal is an interesting one for TPG. Its TPG Growth division is a key investor in Uber, another startup innovating at “the edge of the forest” (Yammer’s David Sacks’ description of the group of companies applying tech to disrupt non-technical fields). Through TPG Capital, it has extensive holdings in the property and travel markets already, specifically through its ownership of RentPath; and part-ownership of Sabre/Travelocity.

It’s not clear how and if any of TPG’s holdings will come into play in relation to Airbnb, but it’s tempting to think of how they could.

Airbnb’s previous, $326 million of backing came from a fairly large pool of investors: Y-Combinator (where it was incubated in 2009), Sequoia Capital, Youniversity Ventures, Greylock Partners, SV Angel, Keith Rabois, Elad Gil, Jeremy Stoppelman, Andreessen Horowitz, General Catalyst Partners, Jeff Bezos, Digital Sky Technologies, CrunchFund (run by Michael Arrington, who founded TechCrunch), Ashton Kutcher, Eniac Ventures and Founders Fund.

We understand that some past investors are also part of this latest round.

Since opening for business five years ago, Airbnb has taken the travel accommodation industry by storm. Effectively, it created and now dominates a new market segment — private homeowners use its cloud-based platform to list and collect payments for their rooms and houses, with mobile apps and social integrations all greasing the wheels of the Airbnb machine.

Airbnb now has over 600,000 listings across nearly 200 countries. The WSJ reported earlier this month that revenues in 2013 were about $250 million, more than double what it made the year before. Like Uber and other companies that have disrupted older and more established industries, that rapid growth has drawn a lot of heat from incumbent competitors — in Airbnb’s case from the hotel industry — which have been played out on legal and regulatory fronts in different cities.

Airbnb is not always fast to reveal what it is doing on the fundraising front. A $250 million round led by Peter Thiel’s Founders Fund, which Airbnb raised in 2012, was only disclosed publicly in 2013 (at TC Disrupt in Berlin, as it happened). In other words, it isn’t clear when the company when the company will announce this round, either.

What it will mean is that Airbnb, now at a $10 billion valuation, may be less quick to run for the public markets. That’s perhaps a sign of the times, with many pointing to an impending “closing” of the IPO window for tech companies, evidenced by a trend among listing companies pricing their offerings below their expected ranges.

Update: The WSJ and Re/Code are reporting the total raise to be $450 million instead of the $500 million we’ve heard. While we’re not sure of the exact reason for the reporting discrepancy, the last time we broke funding news like this, with an overage in raise amount, was Snapchat. In Snapchat’s case, the missing $20 million in other outlets’ coverage was due to a secondary sale of stock by the founders, which we had included in our total.

Image via Frontback.

Style Lend Launches Out Of Y Combinator To Be The Airbnb For Women’s Closets

Style Lend’s Dress Sharing Service

Collaborative consumption marketplaces have taken off in recent years to let people share many of the big ticket items in their lives: houses, apartments, cars. A new startup called Style Lend is gunning to be the go-to site for sharing the big ticket items that are sitting in women’s closets.

Essentially an Airbnb for high-end dresses and accessories, Style Lend is a peer-to-peer marketplace where women can list and rent items for a fraction of their original retail cost. Most women can relate to having at least a couple items in their closets that cost a lot of money, but get very little wear: That one special occasion dress, or designer handbag. These kinds of items stick around because they aren’t quite candidates for consignment. She loves them and wants to keep them, but the truth is that they stay in the closet 95% of the time.

How it works

Much like Airbnb, Style Lend’s purported edge is in the convenience and assurance provided by its added services. For the dress lender, there are two levels of Style Lend’s service: DIY, where the lender gets 70 percent of the rental cost, and “on demand,” where the fee is split 50/50 and Style Lend takes care of details like the dry cleaning before the items are returned. Lenders can also pay $5 for insurance that will handle issues such as small stains, broken zippers, and ripped fabric.

A dress available for rent in San Francisco on Style Lend.

Style Lend CEO Lona Duncan came by TechCrunch headquarters to explain the service and show us the kinds of dresses it offers in person. You can watch that in the video embedded above.

Duncan says that Style Lend is meant to be a win/win transaction: The dress owner gets to monetize the “investment pieces” in her wardrobe and show off her taste to the Style Lend community. The borrower gets to sport a stylish dress or designer purse at a fraction of the price it would take to own it. The site is meant to be a true marketplace, where renters are also borrowers, and vice versa.

The dresses in Style Lend’s “high end designer” category have an average retail value of $2,155, and cost $120 per week to rent. Style Lend requires that each dress on its site have a minimum retail price of $150. Dresses at that “cost-conscious designer” level are rented out at an average price of $30 per week.

Right now Style Lend is only in San Francisco, but it plans to roll out in New York City and other metro areas in the coming months. The company is currently in the winter 2014 class of Y Combinator, which is scheduled to hold its Demo Day next week.

The bigger picture

Fashion may seem like a frivolous space, but it’s a massive industry that has a big impact on the world.

Nowadays, more and more women want to keep up with trends and experiment with different looks. But many can’t justify investing a lot of money on items that they’ll wear only a couple of times. That’s led to the rise of disposable “fast fashion,” which has negative repercussions on human rights and the environment.

If it takes off, Style Lend could help to counteract this shift by encouraging women to buy fewer, better things. If a woman knew that she could share an item with others and make money on it, she might choose to buy the $200 silk Amour Vert dress that’s responsibly made in the U.S., instead of the $40 polyester Forever 21 dress that’s made in a factory with questionable low-cost labor practices. It’s an optimistic vision, but Style Lend has the potential to make it a reality.