The grand New York experiment for New Zealand rental accomodation startup Kiki is over, with cofounder Toby Thomas-Smith announcing he’ll end his Big Apple ambitions for a second time.
“The beginning of Kiki’s intense fire in NYC,” as he described it 13 months ago, is being snuffed out by regulation, he says, announcing the decision to move to another, as yet unnamed town.
“NYC was absolutely everything to us and we’re genuinely gutted we aren’t able to make it work here at the moment,” he wrote on LinkedIn.
“We sacrificed so much to be here and gave it everything we had. We will have more information on our new city soon as the team will be moving there in the coming weeks!”
We can’t wait to help your friends there and be in a market that allows us to help as many people as possible.
The decision is a long way from the prediction Thomas-Smith, who spent two years at Airbnb as an accomodation manager, once made that by 2025 “Airbnb will try to buy us. And I’ll say ‘no, – we’ll buy you’.”
To recap, Kiki began life in New Zealand in late 2018 as the rental accommodation app EasyRent. In August 2023, trans-Tasman VC Blackbird invested a record $7 million in a A$9.5 million Seed round for Kiki. Six months earlier, Blackbird had turned down a $200,000 pitch for cash.
The startup sublets accomodation – short-term leases for a minimum of 1 to 3 months with an average of 6 weeks.
The blue chip cap table included former Airbnb exec Harry Uffindell, Facebook Marketplace founder Bowen Pan, former Bumble exec Michelle Battersby, and Phase One Ventures founder Mahesh Muralidhar, as well as former-Uber execs Tyler Trerotola and Jaikumar Ganesh, among others.
Kiki shuttered its New Zealand business in 2022 to launch in Sydney, where it lasted 12 months before closing in early 2023 for the move to New York, having generated $350,000 in revenue amid claims it was profitable.
Just three months of business activity rolled by in New York before Thomas-Smith announced the closure of “the Tinder of subletting” in January 2024, pivoting instead to launch a “girls only club” called Girls Who NYC with his four other male cofounders.
That idea went down as well as Donald Trump at a DEI convention, with one investor, Jamie Verco saying Kiki’s backers deserve their money back.
“So you start NZ. Shut it to go to Sydney. Start Sydney. It’s a “huge success” but you shut it down to go to NY. Start NY. Shut it to start a women’s safe space,” he responded at the time on Kiki’s now locked Instagram account.
“Are you Serious? Consider giving the money back to Blackbird and other investors (I’m one) as this is looking like a joke.”
That pivot to “super niche persona of ‘corporate girlies’,” aged 25-28, was abandoned a few month later and Kiki revived its original subletting idea in March 2024.
The eternally optimistic Thomas-Smith set out to rebuild the concept on the invitation-only app by meeting prospective customers either over coffee or via FaceTime.
“I’ve had almost 50 coffees and it’s been honestly unbelievable. No one’s tackled the problem before like this and people are blown away. It sounds crazy but I believe we can keep doing this for a year…(hire chief coffee officers ),” he said at the time.
Dreams become regulatory nightmares
A year later and the NYC’s pre-existing short-term rental laws have crushed the over-caffeinated Kiki dream just as it was getting traction, Thomas-Smith says.
“March was Kiki’s biggest month in NYC yet. We had 116 matches, $180k GMV and grew 100% MOM. In April, we had our biggest week of trips added, and we were on track to hit 160 matches and $240k GMV,” he wrote.
[Gross Merchandise Value is a measure of deal value rather than revenue, while the company predicted seven-figures in monthly revenues, in 10 months it banked just US$76,000.]
“It would have been our second-biggest month ever in the company’s history, including Sydney. Growth was finally starting to take off, but we began to feel the impact of NYC regulations.
“The short-term rental laws in NYC were designed to target large platforms like Airbnb that turn entire buildings into illegal hotels and displace locals. Unfortunately, the city is treating us the same as these investment property platforms.”
It was an issue Startup Daily flagged last year, with this writer observing that “much like Uber in its early days up against taxis, subletting is a legally fraught space. It can be illegal from a government perspective and/or in breach of contract for a lessee, unless they get the property owner’s permission to sublet.”
It’s an issue Kiki faced everywhere, which existed before Airbnb came to life.
In New York, renting out an entire unit for less than 30 days is banned except in certain circumstances, such a the owner being present and registered with the city.
Kiki is a victim of the law, but unfairly, Thomas-Smith argues.
“We fully support the original intent of the short term rental laws and acknowledge that we’re operating in a regulatory grey area,” he wrote.
“But Kiki’s mission is to create a platform that helps true locals cover their rent while they’re away, not to contribute to the hollowing out of neighbourhoods. We only allow people’s real homes on Kiki with no investment properties. Locals just earn their rent back, not make a profit therefore easing the housing crisis rather than contributing to it.
“Sadly the regulators don’t agree, and we don’t make the rules.
“And so, we made the difficult decision to go to a city where we can actually help people and build what they want to solve this problem.”
And so, investors eagerly await the evolution of Kiki 4.0, but it’s worth noting that across three cities and six years, the business has yet to generate enough GMV, let alone revenue, to match its 2023 Seed raise.
Kiki 2.0’s NYC sales figures over the past 13 months. Source: Toby Thomas-Smith/LinkedIn
