New Zealand startup Kiki Club’s move from Sydney to New York generated just $76,000 in revenue over two years, but has cost them three times that figure in fines for operating illegally there.
Kiki Club paid US$152,000 (A$224k) to settle charges by the Mayor’s Office of Special Enforcement (OSE) that it violated New York City’s short-term rental laws.
The penalty amounts to three times the fees Kiki collected for short-term rentals (STRs) on its platform. The startup agreed to the settlement without admitting or denying the findings of an OSE investigation.
OSE concluded that Kiki advertised and facilitated STRs between 2023 to March 2025 in violation of Local Law 18, New York’s Short-Term Rental Registration Law. It requires short-term rental hosts and platforms facilitating rentals to register and be approved by the city and submit regular financial reporting.
NYC OSE executive director Christian Klossner said his office notified Kiki Club it was in breach of the law in March 2025. The startup shut down operations in response, as well as complying with requirements to submit past-due quarterly reports. Those supplied figures formed the basis 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 said.
“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 law
Local Law 18 has been in place since the 1960s, and restricts rentals of less than 30 days in homes to two guests staying with its occupants. In 2022, before Kiki relocated to the Big Apple, Local Law 18 added a new registration and verification program in response to estimates that 18,000 homes were being used as illegal short-term rentals.
Cofounder Toby Thomas-Smith leveraging social media influencer @dudewithsign during the New York marathon. Source: Kiki/Instagram
While more than 3,000 host registrations have been approved in NYC, another 14,000 property owners and managers placed their buildings on the prohibited list.
Kiki sublets accomodation – short-term leases for a minimum of 1 to 3 months with an average of 6 weeks. The premise is that while you’re on holidays, someone else moves in and pays your rent. The business model was in complete defiance of Local Law 18.
The OSE investigation found that Kiki Club ran its platform for illegal stays without registration or regulatory oversight via invite-only social-media. Kiki also failed to submit quarterly transaction reports, a requirement under the city’s reporting law, and failed to verify and report nearly 400 STR bookinsg.
Those figures differ from Kiki’s publicly stated figures of US$76,000 in total revenue in the 10 months subletting 459 homes, since it relaunched in 2024 and 756 matches over 13 months before shutting down. Kiki claimed that in its final month in NYC it had 116 matches and US$180,000 gross merchandise value – a measure of deal size rather than revenue.
It also lost $13,000 in December 2024 due to a rental guarantee the startup introduced briefly.
In some ways Kiki’s failure to gain traction in New York was a blessing in disguise when it came to the size of the fine issued. Prior to launching in the Big Apple, Kiki claimed it would generate US$2.5 million in monthly revenue within 12 months. It achieved less than 1% of that figure.
I’m in London still
The Blackbird-backed startup now operates in London and cofounder Toby Thomas-Smith, an eternal optimist with a penchant for publicity stunts, recently posted a photo of the Kiki team with two customers and a cake celebrating 200 rental matches in the UK capital.
Kiki cofounder Toby Thomas-Smith (front, right) in London celebrating the 200th match in the UK capital. Source: LinkedIn
In 3.5 months since launch, Kiki’s had gross merchandise value of $250,000 and Thomas-Smith said Kiki London is now growing faster than Sydney and New York.
Thomas-Smith declared three years ago that by 2025, “Airbnb will try to buy us. And I’ll say ‘no, – we’ll buy you’,”.
But the startup’s winding path to success is more a series of dead ends than roads less travelled during its turbulent 7-year life.
Having launched in Auckland in 2018 as EasyRent, the short-term subletting startup became Kiki.NYC in 2023 following a A$9.5 million Seed round, ahead of the move to New York.
It closed down in New Zealand in 2022, and then Sydney, after 12 months, in 2023. It closed twice in New York, first in January 2024 and then again this year following the OSE intervention.
Thomas-Smith announced an ill-feted plan to launch a “girls only club” called Girls Who NYC with his four other male cofounders after the first closure. Backlash against that idea saw it abandoned and the NYC accomodation idea revived in April 2024.
Thomas-Smith had previously acknowledged that Kiki operating “in a regulatory grey area” in New York.
SmartCompany’s Tegan Jones reported in February this year that Kiki was under investigation by the OSE and also revealed that the startup’s 2023 investor pitch deck flagged potential legal risks, but believed – following in the footsteps of Uber – that a regulatory crackdown could be a “pioneering moment”, and it could either ignore the government or build a lobbying team.
It wasn’t to be. An investor update in April instead 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.”
“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 manager.
Kiki’s blue chip cap table, led by Blackbird, which tipped in 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.
Unlike Airbnb, an automated booking platform, Thomas-Smith and his team have coffees with potential renters ahead of their bookings.
A coffee in London generally costs between $6.50 and $9.
London has its own laws on short term rentals, including a 90-day cap without planning permission, and the person renting out the home must be someone paying council tax on the property.
