New Zealand startup Kiki Membership’s transfer from Sydney to New York generated simply $76,000 in income over two years, however has value them 3 times that determine in fines for working illegally there.
Kiki Membership paid US$152,000 (A$224k) to settle expenses by the Mayor’s Workplace of Particular Enforcement (OSE) that it violated New York Metropolis’s short-term rental legal guidelines.
The penalty quantities to a few occasions the charges Kiki collected for short-term leases (STRs) on its platform. The startup agreed to the settlement with out admitting or denying the findings of an OSE investigation.
OSE concluded that Kiki marketed and facilitated STRs between 2023 to March 2025 in violation of Native Legislation 18, New York’s Quick-Time period Rental Registration Legislation. It requires short-term rental hosts and platforms facilitating leases to register and be accepted by town and submit common monetary reporting.
NYC OSE government director Christian Klossner stated his workplace notified Kiki Membership it was in breach of the legislation in March 2025. The startup shut down operations in response, in addition to complying with necessities to submit past-due quarterly reviews. These provided figures shaped the premise for the penalty.
“This settlement sends a clear message: If you are a company that facilitates short-term rentals, ignoring city laws will be an expensive proposition.” he stated.
“Kiki Club acted as a clandestine conduit for unregistered and illegal short-term rentals, directly undermining the city’s efforts to protect tenants and preserve permanent housing.”
Defying the legislation
Native Legislation 18 has been in place because the Sixties, and restricts leases of lower than 30 days in properties to 2 friends staying with its occupants. In 2022, earlier than Kiki relocated to the Huge Apple, Native Legislation 18 added a brand new registration and verification program in response to estimates that 18,000 properties have been getting used as unlawful short-term leases.
Cofounder Toby Thomas-Smith leveraging social media influencer @dudewithsign in the course of the New York marathon. Supply: Kiki/Instagram
Whereas greater than 3,000 host registrations have been accepted in NYC, one other 14,000 property homeowners and managers positioned their buildings on the prohibited listing.
Kiki sublets accomodation – short-term leases for at least 1 to three months with a median of 6 weeks. The premise is that when you’re on holidays, another person strikes in and pays your hire. The enterprise mannequin was in full defiance of Native Legislation 18.
The OSE investigation discovered that Kiki Membership ran its platform for unlawful stays with out registration or regulatory oversight through invite-only social-media. Kiki additionally didn’t submit quarterly transaction reviews, a requirement underneath town’s reporting legislation, and didn’t confirm and report almost 400 STR bookinsg.
These figures differ from Kiki’s publicly said figures of US$76,000 in whole income within the 10 months subletting 459 properties, because it relaunched in 2024 and 756 matches over 13 months earlier than shutting down. Kiki claimed that in its remaining month in NYC it had 116 matches and US$180,000 gross merchandise worth – a measure of deal dimension moderately than income.
It additionally misplaced $13,000 in December 2024 as a consequence of a rental assure the startup launched briefly.
In some methods Kiki’s failure to achieve traction in New York was a blessing in disguise when it got here to the scale of the high quality issued. Previous to launching within the Huge Apple, Kiki claimed it could generate US$2.5 million in month-to-month income inside 12 months. It achieved lower than 1% of that determine.
I’m in London nonetheless
The Blackbird-backed startup now operates in London and cofounder Toby Thomas-Smith, an everlasting optimist with a penchant for publicity stunts, lately posted a photograph of the Kiki crew with two clients and a cake celebrating 200 rental matches within the UK capital.
Kiki cofounder Toby Thomas-Smith (entrance, proper) in London celebrating the two hundredth match within the UK capital. Supply: LinkedIn
In 3.5 months since launch, Kiki’s had gross merchandise worth of $250,000 and Thomas-Smith stated Kiki London is now rising quicker than Sydney and New York.
Thomas-Smith declared three years in the past that by 2025, “Airbnb will try to buy us. And I’ll say ‘no, – we’ll buy you’,”.
However the startup’s winding path to success is extra a sequence of lifeless ends than roads much less travelled throughout its turbulent 7-year life.
Having launched in Auckland in 2018 as EasyRent, the short-term subletting startup grew to become Kiki.NYC in 2023 following a A$9.5 million Seed spherical, forward of the transfer to New York.
It closed down in New Zealand in 2022, after which Sydney, after 12 months, in 2023. It closed twice in New York, first in January 2024 after which once more this yr following the OSE intervention.
Thomas-Smith introduced an ill-feted plan to launch a “girls only club” known as Ladies Who NYC together with his 4 different male cofounders after the primary closure. Backlash in opposition to that concept noticed it deserted and the NYC accomodation concept revived in April 2024.
Thomas-Smith had beforehand acknowledged that Kiki working “in a regulatory gray space” in New York.
SmartCompany’s Tegan Jones reported in February this yr that Kiki was underneath investigation by the OSE and in addition revealed that the startup’s 2023 investor pitch deck flagged potential authorized dangers, however believed – following within the footsteps of Uber – {that a} regulatory crackdown may very well be a “pioneering moment”, and it might both ignore the federal government or construct a lobbying crew.
It wasn’t to be. An investor replace in April as an alternative stated “We’re not in a monetary place to proceed to work with town on an answer that may work for us and for them, so we’re making the powerful choice to go away New York and go to a metropolis the place we are able to really assist folks and construct what they need.”
“NYC was absolutely everything to us and we’re genuinely gutted we aren’t able to make it work here,” the Kiki cofounder wrote on LinkedIn.
Thomas-Smith spent two years at Airbnb as an accomodation supervisor.
Kiki’s blue chip cap desk, led by Blackbird, which tipped in included former Airbnb exec Harry Uffindell, Fb Market founder Bowen Pan, former Bumble exec Michelle Battersby, and Section One Ventures founder Mahesh Muralidhar, in addition to former-Uber execs Tyler Trerotola and Jaikumar Ganesh, amongst others.
Not like Airbnb, an automatic reserving platform, Thomas-Smith and his crew have coffees with potential renters forward of their bookings.
A espresso in London typically prices between $6.50 and $9.
London has its personal legal guidelines on brief time period leases, together with a 90-day cap with out planning permission, and the particular person renting out the house should be somebody paying council tax on the property.
