My Q1 2019 EA Hotel donation

post by vipulnaik · 2019-04-01T02:23:23.107Z · score: 105 (40 votes) · EA · GW · 6 comments

Contents

      NOTE: I have no affiliation with the EA Hotel. I have never visited
it, nor have I closely collaborated with anybody living there. I did
not show this post to anybody affiliated with the EA Hotel before
posting. Nothing here should be taken as an official statement about
the EA Hotel.
  I like the idea of the EA Hotel
  I like the skin-in-the-game of the key players
  I like the execution so far
    I like both the high demand and the competence exhibited in meeting the demand effectively
    I like that the residents are very positive about the hotel
    I find the resident profiles and their projects reasonably impressive
    I like the openness about the hotel operations and the detailed information available on the website
    I like the cost-effectiveness of the hotel and think it solves the problem (of providing low-cost living) that it set out to solve
  I see institutional risk reasons for lack of institutional funding
  I have not been dissuaded by the reasons against donating that I have seen so far
  I find the value of marginal donations high and easy to grasp
  How I decided to donate and determined the donation amount
None
6 comments

On March 31, 2019, I donated 3200 GBP to the EA Hotel fundraiser via GoFundMe. The donation cost me $4,306.14 USD. My decision was based mainly on the information in the EA Hotel page and the documents linked from the donations list website page on EA Hotel, which include the recent Effective Altruism Forum posts.

In this post, I describe the reasons that influenced my decision to donate. I didn't draft the post before donating, so some of the elaboration includes aspects that didn't (at least consciously) influence my donation decision.

I limited the time I spent writing the post, and will most likely not be able to respond to comments. But please feel free to comment with your thoughts in response to my post or other comments!

NOTE: I have no affiliation with the EA Hotel. I have never visited it, nor have I closely collaborated with anybody living there. I did not show this post to anybody affiliated with the EA Hotel before posting. Nothing here should be taken as an official statement about the EA Hotel.

The sections of the post:

I like the idea of the EA Hotel

My interpretation of the fundamental problem the EA Hotel is trying to solve: provide low-cost and optimized transient living arrangements to people engaged in self-study or early stages of projects. The hotel's low-cost living arrangements are further subsidized so that long-term residents don't have to pay anything at all, and in fact, get a stipend to cover some living expenses. This means that residents can pursue projects with single-minded focus without burning through savings or having to do additional jobs just to keep themselves financially afloat.

The backdrop of the problem, as I understand:

These problems, specially the first one, have been widely acknowledged. Attempts to figure out a new, lower-cost city for EAs and build group housing in that city started since as far back as 2014, when the Coordination of Rationality/EA/SSC Housing Project group was created. Browsing through the archives of that Facebook group is interesting because it shows the amount of effort that has gone in over the years in identifying lower-cost living places for EAs. This is the group where EA Hotel founder Greg Colbourn first announced his intention to buy a hotel in Blackpool.

Side note: Peter McCluskey's comment [EA · GW] suggests that complaining about the high rent in major hubs is a signal of low status, because the most successful and influential people don't seem to complain about it. This does not accord with my impression. More successful people tend to personally be able to afford high rents, but I've seen concern about high cost of living among people across the spectrum. It's more that the set of high-status influential people doesn't overlap much with the set of people who are most vocal about this problem and most interested in solving it.

I like the skin-in-the-game of the key players

One of the main problems with executing a project like the EA Hotel is that it is capital-intensive: a lot of money needs to be put in to implement an idea like this in a manner that is low-cost in the long run. In this case, Greg Colbourn had to spend 130,000 GBP to buy the EA Hotel, and this was after getting it at a cheap price! For comparison, Berkeley REACH pays something like $6,000 per month for rent for a cafe in Berkeley.

I find it impressive that Greg put his own money into purchasing the building and financing the first year of the hotel's operations, at a time when getting outside support would be hard.

Also, browsing through the Coordination of Rationality/EA/SSC Housing Project group archives, it looks like both Greg and Toon Alfrink, the hotel's manager, have participated in the group for quite a while. While that doesn't in and of itself mean much, it does underscore their long-term commitment to the vision.

Skin-in-the-game of key players is very important for me when making a sizable donation to an organization that has not yet achieved the level of financial stability that would make its survival automatic.

I like the execution so far

This breaks down into a lot of pieces:

I like both the high demand and the competence exhibited in meeting the demand effectively

The public announcement about the specific EA Hotel, after buying it, was made by Greg Colbourn on June 18, 2018 [EA · GW]. Occupancy started climbing through July and August. On August 9, the website had been launched and bookings could be made through the website.

By September, the hotel appeared to be running in full steam, and even got press coverage in The Economist and The Times. For the last six months, the hotel appears to have been operating at reasonably high occupancy. The occupancy chart across time is available with the header "Number of guests over time" on the EA Hotel wiki.

Starting a new project and immediately getting traction is impressive. It's even more impressive to have been able to cope well with the demand and keep the hotel residents satisfied.

I like that the residents are very positive about the hotel

Hotel residents appear quite positive about their experience at the hotel; see for instance Matt Goldenberg (halffull) [EA · GW] and the comments on the other posts discussing the hotel.

I find the resident profiles and their projects reasonably impressive

The description of the residents so far [EA · GW] and the projects and work completed [EA · GW] are both decent, and particularly good for something that's just gotten off the ground.

I like the openness about the hotel operations and the detailed information available on the website

The EA Hotel website offers a lot of valuable information for potential hotel residents, but also for others interested in understanding the progress of the hotel. For instance, it includes a description of current guests and their work, a historical occupancy chart, and detailed information about food, cleaning and laundry, showers, wifi, and more.

The EA Hotel team has also been quite forthcoming in sharing information in their fundraiser posts, including information they didn't initially expect to share.

I like the cost-effectiveness of the hotel and think it solves the problem (of providing low-cost living) that it set out to solve

Let's dig more into this. The official estimate for the EA Hotel is a cost of 5700 GBP per resident per year, including the stipend paid out to them. That translates to about $7500 USD per person per year.

How low-cost is this compared to other options? It's definitely cheaper than the average deal in the San Francisco Bay Area or New York City. My anecdotal evidence suggests it would be very very hard to get a place in the San Francisco Bay Area where even the rent + utilities is lower than $7500/year, and once you add food, it will clearly exceed that range. Landing a good deal like this would itself take weeks if not months of searching, time that can burn savings or runway.

I know of two categories of options that would be cheaper than the EA Hotel:

The disadvantages of these options:

Based on this analysis, I think the EA Hotel offers a good option that is not clearly dominated by any other. Moreover, the general idea of having such a hotel, if successful, could be replicated in other locations. That would lead to a wider range of price points to meet the needs of people with different trade-offs.

I see institutional risk reasons for lack of institutional funding

According to a comment on a question asking why the EA Hotel is having trouble fundraising [EA · GW]:

EA Grants is taking a long time to review the hotel's application. There have been rumours that this is because of one or several of the following: (a.) staffing issues at CEA which have only recently been resolved; (b.) desire to perform an audit/review of the hotel. Also, to see some operational changes at the hotel before extending runway; (c.) a strategic decision to delay funding the hotel as a countermeasure against cultural dilution, or PR risk. (c.) seems unlikely.

I can't speak to the accuracy of the claims here, but they are suggestive.

The EA Hotel is a sufficiently distinctive project, and also an incubator of many other projects, that institutions funding it may perceive risk to their reputation from even one of the funded projects by the EA Hotel going wrong. I don't expect this to prevent the EA Hotel from getting institutionally funded in the long run. But I do expect the process to take longer. I think a stronger, longer track record will be needed before it gets funded by EA Funds, EA Grants, or other larger sources of funding in the EA community.

This means that individual donors, who have less of these institutional risk concerns, have a bigger role to play in the beginning.

I have not been dissuaded by the reasons against donating that I have seen so far

This applies first and foremost to the reasons I had access to prior to making my donation decision. But I've been keeping an eye on the comments on the Grue Slinky's $100 prize for best argument post [EA · GW], the question post by Milan Griffes [EA · GW], and the case for the EA hotel post [EA · GW] and even now, I don't see anything that changes my stance meaningfully.

My synthesis of the arguments so far is that there is a strong prior in favor of supporting individuals and projects directly rather than supporting the EA Hotel. In this view, the evidence emerging from the EA Hotel so far does not meaningfully alter that prior. Different variants of this story:

I see all the critiques as having some value. In fact, it may well be the case that the sustainable model for the hotel in the long term would be to put a much lower ceiling on the number of long-term residents for whom fees are waived. Nonetheless, I think the evidence so far is positive enough, and the people involved in running the hotel have enough skin in the game, that I expect with high probability that they will make the necessary adjustments based on the feedback they get. In the meantime, I think there is a lot of value in this experiment, and I want there to be enough room for the EA Hotel team to plan the transition and tweaking of their models without causing too much disruption.

I find the value of marginal donations high and easy to grasp

The EA Hotel has a relatively easy-to-grasp operational math: it costs about 240 GBP per day to run, with the cost varying a bit based on current occupancy, and in particular on the mix of residents (how many are paying cost and how many are staying for free). The fundraiser uses this math to ask for 130,000 GBP to cover 18 months of operations. Greg Colbourn gives a figure of 265 GBP in this comment [EA · GW] but clarifies that actual costs in January and Febrary where 25% less after factoring in rent paid costs; I'm taking 240 GBP as somewhere in between the theoretical figure and the observed figure for January and February.

In the same comment, Colbourn says:

Our costs are ~£8k/month, so even buying a month or two runway would make a big difference in terms of giving us some breathing space to work on getting more money coming in. It's also approximately continuously divisible in that every ~£265 will keep us going another day.

With this model of spending, I can concretely think of my donation of 3200 GBP as having added about 13 days to the hotel's runway.

The aspect of this that's hard to quantify: I'm not actually just buying 13 days of the hotel's operations. My goal is to help the hotel extend its runway so that it can be better equipped to do some combination of raising more money and making the operational changes needed to survive with whatever money it has. How good 13 days is in terms of making the hotel more likely to fundraise enough money to survive in the long term, I don't know. Nonetheless, it is still a relatively clear calculation with a potential for high impact.

The other part that is hard to predict in advance: how much my donation might trigger other donations. It is possible that some large donations can spur other large donations by sending a signal. It's even possible that this post might convince more people to donate to the EA Hotel, though that is not the primary purpose of my writing this post.

One area of concern I have is that the fundraiser has not gone well. I am not concerned in terms of what it says about the value of funding the hotel, but I do have concern in terms of what it says about the hotel's ability to raise funds in the longer term. However, I chose to donate despite this because:

How I decided to donate and determined the donation amount

Unlike the other sections, this section is a more personal one that discusses how I traded off my own finances against what I saw as a funding gap that needed filling. For background, see my donation history page and my 2018 donations post [EA · GW].

A few months ago, back when the first EA Hotel fundraiser post [EA · GW] was published, I had looked at the EA Hotel fundraiser and dug around a bit on their website. I remember doing so while doing the initial round of adding documents related to the EA Hotel on the donations list website (the date of this commit was January 9, about two weeks after the fundraiser post).

Since then, I didn't think actively about the EA Hotel till I saw more posts of theirs on the Effective Altruism Forum in the past week. On March 30, I added a bunch more documents related to the EA Hotel to the donations list website. As I read through the documents, I started thinking through the arguments described in this post. I came to the tentative conclusion that there was an important funding gap that urgently needed to be filled.

I ran this thinking by my esteemed friend and collaborator-on-many-projects Issa Rice, who did not immediately point out major flaws in my thinking. I slept over the thought on the night of March 30. On the morning of March 31, I reviewed the information, and read a new post The case for the EA Hotel [EA · GW]. This solidified my decision to donate.

When I had initially been pondering how much to donate, I had been thinking of an amount in the range of 1500 to 4000 USD. I ultimately decided on a value slightly above the high end of this range. My reasons for donating as much as I did were:

The main reasons I didn't donate more:

The main reasons I didn't defer the donation:

6 comments

Comments sorted by top scores.

comment by Greg_Colbourn · 2019-04-01T15:11:34.294Z · score: 25 (12 votes) · EA · GW

Thanks so much Vipul! :)

With this model of spending, I can concretely think of my donation of 3200 GBP as having added about 13 days to the hotel's runway.

Note that costs have been lower recently (due to relying more on volunteer labour, and an increase in contributions from guests) - for an average over January-March your donation covers 20 days of costs, and for March alone it covers 27 days (and will likely be similar for April).

comment by aarongertler · 2019-04-01T11:28:53.469Z · score: 20 (15 votes) · EA · GW

Strong upvote. This was beautifully written, and I love the categorical breakdown of each positive or negative consideration. I hope that other donation-related Forum posts are written with this level of care (and the associated donations made with this level of analysis, at least by people who have the time to do so and the desire to fund smaller projects).

comment by mike_mclaren · 2019-04-08T16:22:43.334Z · score: 11 (9 votes) · EA · GW

+1 thanks to Vipul for writing this. But I also want to balance the second part of Aaron's comment by saying that I would like to see more posts explaining personal donations in general, and don't think that will happen if the average level of quality and time has to hit this level. Please share your donation reasonings even if you don't feel super confident about them and don't have time to make a carefully researched and written post! I had originally thought "Blog posts" would be a good venue for such less-well-crafted posts, but I see now that attempting to make a new blog post simply takes you to the new post page.

comment by aarongertler · 2019-04-08T22:29:33.450Z · score: 5 (4 votes) · EA · GW

Mike,

To clarify the difference between "personal blog" and other categories: If you'd prefer not to have a post marked as "meta" or "frontpage" (and thus displayed to more people), you can leave a note at the top of the post requesting that it be left as a "personal blog" post, or message me to let me know I shouldn't add a meta/frontpage category. (I'm the Forum's lead moderator.)

comment by mike_mclaren · 2019-04-11T11:32:57.879Z · score: 5 (2 votes) · EA · GW

Thanks for clarifying! Perhaps clicking the "Blog post" button could autofill a standard note for this, that one could choose to delete. That way new users will be able to understand how this works right away. (Unless the idea is to phase out / discourage / remove this feature)

comment by Milan_Griffes · 2019-04-01T15:08:41.746Z · score: 3 (2 votes) · EA · GW

+1, thanks for this Vipul!