On Emerson and Survival

A Very Personal Post

Self Reliance For Survival: good for me, Apple & Amazon

It has been a while since I wrote a Big Stack Riff and I have good reason.

My dad was very sick, and is now in physical rehab - these last couple of months have been hard on mom and dad. Dad is confused and his legs barely work. He’s fallen a couple of times and normal sleep for me is nonexistent - he sometimes calls a couple of times in the morning, confused and I have to reorient Dad and pray he doesn’t try to walk without help.

In a flash a couple of months ago the weight of my family’s world was put on my shoulders and to survive you have to find deep resources inside to make it through.

I took it for granted that I could always come to family for support and now it’s the other way around. I’m the one doing all the talking with doctors and nurses, dealing with bills and paperwork, and figuring out what’s next. I’m counting on myself to deal with the gritty scary details. The folks were counting on me and I rediscovered something about how to survive.

I’ll make it simple. That deepest resource I mentioned, when you’re focused on survival, is self-reliance. And it has not been an easy thing to find sometimes.

Ralph Waldo Emerson wrote an essay about it. He was speaking to you and me, individuals and how to get by in life. And right now I need it.

Self-reliance is also the key to the survival of businesses and countries. Emerson would puke at this transition, since he was focused on the individual and not some group-think entity like a “joint stock company” but this is my Riff.

Society is a joint-stock company, in which the members agree, for the better securing of his bread to each shareholder, to surrender the liberty and culture of the eater. The virtue in most request is conformity. Self-reliance is its aversion.

If someone or Emerson objects to using him in this way, I’ll just quote from Emerson: “What I must do is all that concerns me, not what the people think.”

I haven’t been in any frame of mind to think and write. But I’m digging deep and hopefully you can relate to this. I need to “do something” so while I’m looking for answers I’m going to use my mind in other ways.

I’ve got some ideas about what’s happening at Apple and Amazon which I understand with my current frame of mind.

Apple is in the early stages of developing satellite technology to support its devices. A dozen techs led by a couple of engineers who worked on a satellite imaging bought by Google. Thanks to the rise of commercial spaceflight and new kinds of low-cost small satellites, my guess is Apple sees a cheap R&D opportunity to develop space-related tech instead of relying on other companies. It’s too early to say what we can expect but I imagine this is the kind of R&D that an aerospace, defense, or telecommunications business normally do.

My guess is since they hired former Google techs that that there’s a “Maps” project in the works. Another idea is maybe Apple would like to do things to bypass some of the connectivity provided by telecom providers. If so then it’s a kind of Ben Thompson Stratechery play, where you cut out the middle man you used to do business with for a service and do it yourself or make it unnecessary. (“Modularity” is probably the Stratechery phrase.)

Just imagine using an Apple account a better version of Google Maps - work, travel and commerce gets decided more by Apple and less by Google and other companies.

Amazon is also testing an idea to make it less reliant on other companies for its survival. In the past year, it is getting more involved in the rail business and bought 250 specially branded and designed freight containers for a U.S. West coast experiment. Amazon is testing how to cut out middle-men providers known as “intermodal marketing companies”, like J.B. Hunt, Hub and Schneider, and putting its own freight containers and dealing directly with railroad companies.

It’s no surprise, since Amazon has been building its own delivery infrastructure over the last few years, including planes, and cutting out mail carriers - it was only a matter of time. If it works then Amazon shaves down the cost of shipping everything we buy through Amazon.

Look at what happened to XPO Logistics, FedEx and UPS. Amazon is trying to do more for itself and these companies’ bottom line have been squeezed.

Look at what happened to Nokia and Ericsson (google it if you’re Gen Z) . Apple creating a whole new product basically shoved them into the history books or words for google searches.

It’s gloomy to talk about cutting out middlemen but we know Amazon and Apple made themselves stronger for doing it. If your savings are parked in their shares, then you have one more way of understanding how they continue to be stronger and hopefully your hard-earned funds safer.

Self-reliance is a very personal phrase -  it’s a bit too intimate to use when describing the hard competitive images of tech disruption but it helps me understand competitive advantage and survival in a new way.

I’m going to end on a personal note, about dad. There’s a lot to do, including weeks of physical therapy, getting home help and then a whole separate health issue involving radiation treatments. But I made sure we kept track of the medical care, found a decent rehab place, and I want to find a good physical therapist for when I can bring dad home. Then it’s about figuring how how to get him radiation for several weeks straight. Dad got thrown into the deep end and I’m trusting in my ability to help pull him out and back to the world. I don’t have answers, I’m finding them one step at a time.

Last words from Emerson: “I shall endeavour to nourish my parents, to support my family…”

Google, Privacy and Faust

Has a Faustian Exchange of Information For Privacy Ending

My thoughts on Google (and every other “platform” which has prospered in an era of Internet’s “original sin”) a Faustian Exchange of Information for Privacy is Ending

My thoughts in bullet point format to help me wrap my arms around this idea.

  • Google Will Be Forced to Shift Its Purpose and Business

  • Faust infinite knowledge at a price

  • Google offers infinite knowledge

  • Privacy is the price

  • Marc Andreesen’s “original sin” of Internet (advertising > embedded payments)

  • Privacy solution through the blockchain’s potential (Blockstack) may derail Google’s current model

  • There is a big company centralized monopoly negative popular mood

  • Antitrust comes at same time as decentralized disruption of Blockchain

  • Current trend is back towards subscriptions and anti-big monopoly tech mood (Stoller’s substack) reflects this

  • George Gilder compares Google’s near-time fate as like industrial companies getting shuttered

  • (Gilder calls what is coming, “After Google”, the CryptoCosm) It’s almost the promise of the 1990s underground CYPHERpunks - a network for individuals with privacy protection

  • Google will not disappear but like all massive network powers (hello AT&T), tech giants (IBM), it won’t be the company that investors bought into in the late 1990s

We’re in a big shift from one model of the Internet -- which exploded in size thanks to the “original sin” of the early commercial Internet -- surrendering our privacy as users in exchange for a massive internet.

We may be moving towards a more private and personalized Internet, changing everything. Let’s go back to the “original sin” of the Internet - “free” public information in exchange for personal information for advertising monetization.

A Bargain about Online Payments and Privacy:

Faust was someone who made a deal with the devil to get infinite knowledge and wealth. And that’s relevant with the Internet, commerce, and the interplay between how advertising works and what’s happened to privacy.

We got a free internet and in return many businesses grew by paying for advertising.

The funniest remnant of this birth was a web page, “the Mllion Dollar Homepage” where people paid a dollar for a tiny sliver of a page of micro sized banners.  The original version of the business model of online advertising, via ideaLabs Bill Gross, has dominated the Internet.

(the “Million Dollar Homepage”, online banners woohoo!) 

Google would be the ultimate and current winner of online advertising, but also what became of users’ privacy. In a way users became the “product” because their user data became productized, information was given for no upfront cost generally but it was in fact being paid for by our user data, us, our User Generated Content (UGC) being the thing we gave in return.

Google made a fortune based on this model. In return for advertising, we got lots of data (access to so many sites, including the ones you hope you remembered wiping from your browser history).

Marc Andreesen calls the “original sin” of the Internet. 

Andreesen told a story about how he and his colleagues, presumably during the early days of the commercial internet, had approached the payment players, like the credit cards and banks, about integrating payments into the browser and software.  

His team’s meeting with a so-called thought leader at one of those companies was less than encouraging. The team had asked the expert to touch a blue hyperlink line on the screen and the expert had to be told that he couldn’t simply touch the screen (remember that this was desktop internet in early days) and had to use a “mouse”. 

While that seems funny, it reflected an early end to what would have been a different kind of internet - where you paid as you went and never surrendered data about yourself. Your privacy was intact.

Marc Andreesen’s story of the Internet’s "original sin" was that a failure to create a payments solution early on, which killed one vision and the version of an Internet which was more private.

Jason Fried @DHH of Basecamp said:

Google’s doublespeak is impeccable. The key objective for Google is no longer relevant search results, but relevant ads.

RE: Google Ads

GoogleAds, Replying to @jasonfried: 

To provide users with the most relevant ads, we don’t restrict trademarked terms as keywords. We do restrict trademarked terms in ad text if the trademark owner files a complaint here: https://services.google.com/inquiry/aw_tmcomplaint

The erosion of privacy also fed the rise of the sharing economy, and society shares information and then much more. A counter-trend is an evolution of what was a small movement, the Cypherpunks, which helped create current crypto tech and culture trends.

During the early days of the Internet, the Cypherpunks had formed, recognizing the rise of the Internet’s implications for society and privacy. Their early efforts involved libertarian ideals, code and privacy. David Chaum was a part of that time and trend. He had however, also attempted to reach out to big business with his DigiCash project, to do deals with financial institutions.

The “Faustian Bargain” is how most of the Internet works but it may be shifting.

George Gilder shared outlooks from his book "After Google” in an interview with the heritage foundation - where he talked about the rise of Blockchain technology.

Blockstack is a new startup, which may be one of those new post-Google players. It had developed a decentralized ID solution, and is focused on building tools to help developers build apps/software with decentralization in mind.

Blockstack’s motto is “Don’t Be Evil” - they have deliberately set themselves up to be compared to Google’s old motto about “Doing Good”.

At the same time, however, older financial operators such as Fidelity, Intercontinental Exchange are also building. Their efforts have 2 ingredients in common: of older “pre-crypto” businesses working with governmental authorities and entities.

Would GOOGLE have to “modernize” for George Gilder’s “cryptocosm”?

The Faustian Bargain remains but the terms have changed and includes new players.

George Gilder and "Life after Google"

Modern & Modem Love

Online Dating

Modern Love: Match Sweeping Up and To The Right

Everyone has stories about meeting someone they liked or how they tried to meet them. I’m talking about dating. 

I have met women through friends’ introductions, at coffee places, while waiting for a bus or train, nightspots, etc. but the fastest way was the internet. It’s about connecting. There have been good times, dead-ends and very close friends. 

One person was charmed by a message I sent and she drove up from the Southeast U.S. to meet about 12+ hours later. I ended up meeting a friend of hers who lived in the West Coast, and I fell head over heels for the friend, leading to a long distance thing for a few years. But that’s a story for another time. 

Time for a history talk.

A long time ago the idea of dating didn’t exist. You either got married to someone from your village or at best to someone from the next village. 

If neither of those worked, you became the family member that lived in the spare room and helped keep the family farm or shop going. 

Good old Uncle John, Aunt Mary or Cousin Jack, bless their hearts… 

Not too long ago marriage was defined by tradition, distance, lack of transportation, and communication… unless you were wealthy at the time, like royalty or a rich merchant. 

The Ruler of Kingdom 1 would marry off his daughter to the Ruler of Kingdom 2 to make a bigger kingdom. The regular people were stuck unless the odd boy in the village or town decided to go on some adventure abroad and actually made it alive to a new place.

Eventually travelling to a new land in search of opportunity became a broader trend. First, that new land was the next province, then the next country, and eventually it was halfway around the world. Cities was where the action was in the new world.

We have family stories about how our great-great-grandparents met someone and how the family tree came to be. That’s how my folks met. They were from different parts of the old country. Their families ended up in the same city for the same reason - in search of opportunity - and ended up in the same building. 

I imagined that my parents bumped into each other at the entrance, or maybe their friends in the building made the introductions since they were “old school”. A new place but old ways and old school rules…

Eventually new rules came in an entirely new kind of place — The Internet. The world became one big noisy city online. If you’re reading this, then you’re my neighbor in a way. Hi! 

But let’s circle back to the idea of dating and how people meet and mate.

For the longest time, people did this through things in common, including friends, school, a college campus or church. It was mostly random meetings because we didn't really control the world around us, we just lived in and moved through it. After the birth of the Internet this changed.

Back in 1999, when the Matrix debuted and blew minds, “computer dating”, which used to be novel and outside the mainstream, was gaining acceptance as one of the leading ways people met. 

No more sitting in the living room, or the parlour-room (what is a parlour-room anyway?) with the first (and maybe last) person you’ll ever date. No more sitting with his/her parents hoping you’ll shake hands with your date before the evening is done - oh, life in 1899.

Now with the Internet, it’s all different, and it seems we’ll never run out of company. 

But not so fast, this trend has displaced people’s random life connections in person. And there is a downside to that. 

There is an epidemic of loneliness in the most crowded of spaces, the Internet. In the most connected of communities like Palo Alto, suicides were at record levels for young people. We are never more connected electronically and never more disaffected and disassociated from ourselves and with each other. I think part of this is because people still need to be around each other in person.

The need to meet and greet, to match and mate, remains. The times change, but we remain the same. Displacing family and friends, Facebook and “facetime” seems to have taken over matchmaking.

And Match.com has become a King that plays cupid for everyone in the Kingdom of the Internet. The company’s recent numbers, were reported as Q2 498M, up 18% year-over-year, with 503K more subs.

Q2 revenue: $498M (18% yoy)

Q2 EBITDA: $204M (41% mgn)

Q2 subscription adds: 503K

Looking at this map, I wonder what a date is like in South Dakota, it certainly seems less stressful on the pocketbook. BUT Minnesota at 109.81 is over twice the cost of neighboring Iowa (at 50.90)! Anyway, it’s clear that dating in the right and left coast is a bit pricey.

(I wonder how this map compares if overlaid with other economic and societal data points, like job and health trends. That’s for another time. Can you imagine a timeline of the cost of love: the cost of first date, that wedding industry scam of full package ceremony, first home, first kid, first divorce..?)

A chart from a study at Stanford shows how couples met over the last few years post-WW2.

Modern love has become, to use a 1999 internet word, modem love.

What’s sad is the dating trend of “met through friends” peaked in the 1970s/80s. What happened?

I think it must correspond with the change in the economy. Or maybe we all need new friends.

One of the dating trends in decline is “met through or as coworkers”.  In today’s socially sensitive times, it’s no surprise that meeting at work may flatline to zero. But extrapolation is a bad habit.Maybe new rules of how people socialize in the workplace will develop.

(Just picture it, all those WeWorkers, stressed lonely entrepreneurs and all those people who moved to the “big city” for work, all trying to find love. I wonder if some Iowans or Nebraskans miss the low cost of dates back home.)

Let’s go through some of the trends drawn in the chart. The category “Bars and restaurants”, that original standby of late 20th century life, comes in a distant second to “met online”. It’s certainly less expensive and intoxicating to hit send than to get a round of craft beer, white claw, and 19th century cocktails. 

Another category, how people “Met in college”, peaked during Internet 1.0. It seems to have been displaced as laptops and then smartphones took over via apps and games. This is no surprise. Facebook according to the company’s official story was started to help “Zuck” meet girls, and it was likely just the beginning of the end of pre-Internet “Met in college” dating.

A fascinating trend is that “met through church” may have stopped falling and it may have flattened out its decline. I wonder if the loneliness epidemic is one part of the reason. We all seek solace and maybe also at one of the oldest of gathering places: Church.

Forget 1999, it’s like 1949 for a small number of couples still finding love just like the “Greatest Generation” at places of worship.

Speaking of 1949, according to that same study from Stanford, “From the end of World War II until 2013, the most popular way heterosexual Americans met their romantic partners was through the intermediation of friends.” Dating pre-Internet was the same for decades until the 1990s.

The study reported that many trends were in sharp decline due to the rise of the Internet. I believe that it may have been for some simple reasons. 

What helped propel online dating was the ease and safety of “meeting” first via app, less stress in coming up with text messages, and video instead of the unique stresses of in-person conversation. In person meetings are so very different from disposable messaging.

The Stanford paper’s abstract summarized findings we all kind of already knew:

...new data from a nationally representative 2017 survey of American adults. For 

heterosexual couples in the U.S., meeting online has become the most popular way couples meet,  eclipsing meeting through friends for the first time around 2013.

Moreover, among the couples who meet online, the proportion who have met through the mediation of third persons has declined over time. We find that Internet meeting is displacing the roles that family and friends once played in bringing couples together.

This rise of meeting online comes at the same time as the loneliness epidemic. We made it so easy to meet, so easy to avoid, cut and run, “ghost” each other in seconds. This leads to less conversation and more loneliness. And lonely people want company, so they resort to the Internet to fix this loneliness. Does this become a self-perpetuating, endless cycle?

But all is not lost. The Wall Street Journal noted that marriages have not been disrupted by apps. In fact, these tools actually helped: 

Couples who meet online tend to communicate better and have longer and happier relationships.

“Modem Love” might not be so bad for marriages because the key to success is the same as before the Internet.

 It comes down to communication. 

We made it too easy to talk less, move fast, swipe left, delete or ignore… 

The happiest folks may be those who do the complete opposite. That’s on us.

Apple's Growth Curves

Hardware then Services, then Hardware...

Apple continues to be understood as a hardware business. Hardware design was at the core of Apple (no pun) since its founding in the 1970s -- but so was its software..

Back when I bought my first Apple computer, I became an “Apple User” and liked the feeling - I belonged. And then one day it was stolen! (OMG, my browser history!) My insurance took care of it but I missed that machine -- and what I had not saved to a backup.

(This pic is not my first Apple computer BUT it is the first computer from Apple, Apple 1, 1976)

Today, as long as I can protect my Apple account and services, losing Apple hardware won’t result in separation anxiety. It’s all about that “Cloud” -- which is really someone else’s computer.

Even if my first “Apple” wasn’t stolen, today I would have upgraded to a “good enough” machine  -- good enough to take advantage of Apple software and services.

A shift is happening -- and iPhone price-cuts are part of this change. Apple customers aren’t jumping to buy the latest version of iPhone like they used to. The thrill is gone.

Stratechery observed this subtle but real change in Apple’s business from hardware to services:

Apple cut prices.

It was easy to miss, given that the iPhone 11 Pro, the successor to the iPhone X and then Xs, hasn’t changed in price: it still starts at $999 ($1,099 for the larger model), and tops out at $1,449); if you want the best you are going to pay for it.

Perhaps the most interesting aside in the keynote, though, is that for the first time a majority of Apple’s customers weren’t willing to pay for the best.

The real innovation for Apple: hardware is a gateway to services and subscriptions.

The sales trend for iPhones shows a drift from “must have the latest versions” to “good enough” phones that can allow users to access Apple services.

And what kind of services and subscriptions revenue can we expect?

One of those services will include a subscription service for video games -- “Apple Arcade”. It’s going live in 150 countries, giving subscribers access to about 100 games, old and new. Apple pays for the up-front costs of getting games, and over time subscriptions create pure profit.

Another Apple Service with economics similar to Apple Arcade is Apple TV+.

The real comparison to Apple TV+ is Roku -- not Netflix as you might think. Roku sells hardware at cost but makes the money on the programming. For Apple, video content is a customer acquisition cost paid in exchange for the long-term and recurring revenue of a subscription. 

A year’s subscription of Apple TV+ comes with the latest Apple hardware. For less than $20 a month, customers can buy an iPhone 11 and also become subscribers of Apple TV+.  Other service lines include the AppleCare+ program.

Apple’s latest moves are part of its long history of change. The Apple experience has been neverending dance between hardware and software.

A “Big Stack” piece I wrote recently, “Jony Ive's Long Goodbye” puts it plainly:

Apple’s ability to change is why it is still in business and has become a global tech giant.

When the company nearly died in the late nineties it began its most memorable and transformative moment. Founder Steve Jobs had returned from exile. Upon his return, he scrapped multiple product lines and made peace with its “enemy” at the time -- Microsoft. He would then transform Apple and take it into the future again.  

Since its founding Apple has been repeatedly loved, lost, left for dead, rediscovered and loved again. This cycle is perfectly natural. The “S curve” growth model is relevant.

The “S” growth curve helps explain the interplay between software and hardware at Apple.

The first S curve was for Apple’s original product, the Apple 1 and Apple 2 personal computer in the 1970s and 1980s -- in the early days of mainstream demand for PCs. This explosive growth was then extended by new software and hardware upgrades. 

Like the “S” in the chart shared, growth is small at first but then accelerates as more people discover and buy the product. Eventually growth flattens out, after the last adopters jump on board, and growth hits the top of the “S” curve.

And then a new “S” curve hopefully begins, just like a series of new S curves in succession. It’s not as smooth as in the charts shared but this is what is going on each time any company sells a new product or service or finds a new market opportunity with lots of growth potential.

Apple’s next big S curve was when Steve Jobs returned to Apple in the late 1990s -- which was based on sales of new exciting hardware including candy gum drop colored PCs. This hardware also rode the first waves of demand for Internet-based services. Services, including music via Apple’s “iTunes” were sold. This growth was later extended by a whole new hardware line -- small devices with a specific purpose: iPods.

The next S curve, a few years before the 2010s, was due to the merger of three things: attractively designed small form factors (similar in size to iPods), Apple’s PCs and OS, and lastly telecommunications capability. A massive new hardware product was born --  iPhones -- smartphones. 

This hardware was a gateway to an ecosystem of software, “apps”, via the” App Store”. The iPhone’s S curve has lasted for a decade. And now most of the world has either an Apple or another maker’s smartphone. This S curve is done.

S curves end eventually because you run out of new buyers and there are no more massive new benefits that can be added in newer versions of the same product to extend that curve.

Time for a new S Curve. And that will involve a dominant business model of software related revenues, which we know about via Software as a Service (SaaS): subscriptions.

The next S curves will be Apple subscriptions BUT also hardware called wearables. (Remember that a dance between hardware and software is still part of Apple’s S curves.)

Apple will still be making new hardware. “Wearables” is a hardware reflecting a long-running, multi-decade trend -- of hardware’s convergence with our bodies. Hardware is moving further from machines on a desk and closer to our bodies -- via high powered bracelets on our wrists or ear-mikes that stay in our ear. But this hardware is merely a vehicle to access subscriptions.

Some closing thoughts on Apple.

AirBnB, Scourge of Canada's Rental Markets

AirBnB, Scourge of Canada’s Rental Markets

My family owned a house that I lived in when I was young. It was a three family house. My grandma lived on the third floor in the smallest unit, my cousins lived on the second floor and my family lived on the first floor. Eventually we moved on but we never sold the house. 

Over time it became a modest rental property. Grandma was still living there but so did one of my closest friends. He rented out the second floor apartment and they became an unlikely duo: a tiny Asian grandmother barely five foot tall and a 6 foot-plus lanky tech guy with dreadlocks who was my brother from another mother. He was very different but Grandma became fond of him.

My friend’s apartment was spartan. He barely had any furniture, aside from his computers, a card table and some chairs, a giant recycling bag filled with empty soda cans - soda was daily “fuel” - and an air-mattress. The rent was automatically sent via direct deposit and one time he even heroically shooed out a baby raccoon that had somehow crashed through the roof.

Nowadays families from Nepal, Thailand and Ecuador are living in that house. It has gone from being lived in by family, then by friends, and now, strangers. Over that time the length of stay has shrunk from decades down to years, and maybe it will go down to a few months at a time.

That’s happening at scale - much shorter stays as a service - in The Sharing Economy.

AirBnB started in 2007 with an air-mattress and a need to “make a few bucks” to help pay expensive San Francisco rent. A decade later, massive VC investments mixed with a good story morphed that air-mattress into a global business. 

Air-mattresses! If only I figured that out I could have gotten some “series A” and more to become a startup magnate when my friend was still living as my Grandma’s de facto “roommate”. 

Ah well… 

Just like Uber and Lyft, AirBnB’s growth has caused a lot of friction. While I have relatives all over the world, about half my family lives in Canada, and sometimes family chit-chat gets my attention. And some of the family gossip is humble bragging by older relatives about their home values. 

But lately, there’s grumbling by my cousins about the difficulty of finding a good rental. This is where AirBnB comes in. AirBnB has unexpectedly become a villain in what was already a tight rental market in Canada.

A tight Canadian rental market exists for a number of reasons:

  • Homes are still too expensive even after rate hikes and tighter federal mortgage rules that were enacted to cool a hot housing market

  • Many people have to rent because they can’t afford these still expensive homes

  • There is a lot of competition for rentals from immigrants

  • Not enough rental homes have been built in places where people want to live, especially in the big cities 

It’s become harder to buy a house in Canada since 2017. 

This was due to interest rate hikes in mid-2017 and the introduction of a federal mortgage stress test at the beginning of 2018 that disqualified many buyers. 

The hikes and tighter mortgages were done to cool what was an overheated housing market. But the adverse side-effect is that it's now actually harder to buy a house.

According to the 2019 RE/MAX Housing Market Outlook Omnibus Survey, 36 per cent of Canadians are considering buying a home in the next five years, down from 48 per cent in 2018. RE/MAX blames the drop in interest on the mortgage stress test and rising interest rates, both of which are eating into the purchasing power of buyers.

You would think that lower prices would be great for Canadians in search of a home. Lower prices means more homes right? 


They’re still too expensive. So people have to rent. And there is a lot of competition for rentals.

Rental demand has increased for a number of reasons including increased immigration over the last few years. 

Canada has taken in 300,000+ thousand immigrants annually since the immigration rules were liberalized in 2015. This is the largest number since 1910. 

The national vacancy rate in Canada has dropped to 2.4% which is low by international standards. The Global Property Guide via the Canadian Mortgage and Housing Corporation (CMHC) report of the national vacancy rate’s decline confirms the rental market squeeze.

The national vacancy rate was 2.4% in 2018, down from 3% in 2017, 3.7% in 2016 and 3.5% in 2015, according to the CMHC. It is considered very low by international standards. Because of skyrocketing house prices in recent years, an increasing number of Canadians have no choice but to rent.

There has been an increase in rental construction but it’s too slow and not enough for current demand, especially in big cities like Toronto where they’re needed the most.

Now with a tight rental market, Airbnb has made things even worse. 

AirBnB has vacuumed up most of the spare rental supply in Canada’s big cities when the demand-supply imbalance was already tight

Airbnb couldhave sapped as many as 31,000 units out of Canada’s rental market in the last year — enough to represent a drag of as much as one percentage point on vacancy rates in each of the country’s three biggest cities.

That’s close to the total rental vacancy rate in each city, as reported by the Canada Mortgage and Housing Corporation (CMHC).

And it’s a problem that appears to be growing, according to a paper out of McGill University’s School of Urban Planning.

Through removing housing that would otherwise be available on the long-term rental market, Airbnb is reducing housing supply and, in turn, housing affordability,” researchers found.”

AirBnB might be great for property owners like my aunts and uncles who want to squeeze some money out of the homes they own, but it’s squeezing my cousins out of rentals they can afford. 

More rentals are being built but that takes time. For now the squeeze is on.

My guess is that the government will be encouraged to put the squeeze on AirBnB as part of a broader push to increase rental housing supply. The company will likely fight back. 

I mean if I were running a successful business, I wouldn’t just rollover and back off from a huge market opportunity. And at the same time, if I was a government with strong social programs, I wouldn’t let a private tech startup squeeze my country’s housing market. 

There’s trouble coming. Public sentiment has shifted and tech giants and unicorn startups are under scrutiny. 

If you’re a Canadian land-lord then you’re doing well, and it could be quite a while before rental supply catches up with so much demand pressure. If you’re AirBnB, you’re gonna be hustling to make sure you don’t lose a nice rental market situation. And at the same time you’ll be trying to find ways to be portrayed as a good guy who’s helping home-owners.

I wonder if we will end up going full-circle in some markets? Will an anti-sharing business model? Is what’s happening in Canada going to be a test-case for AirBnB’s ambitions?

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