Reservation Scalping Startup Founder Defends Service as "Ethical"

ReservationHop only made it an hour after launching before the criticism to start pouring in. Twitter users were outraged. One restaurateur described the service as "disgusting and hurtful." Even TechCrunch couldn't stomach what ReservationHop was selling.

Normally, a founder facing such backlash would shut down their Frankenstein. Not so for the restaurant reservation scalping site's founder Brian Mayer: he quickly defended his vulture economy startup as "ethical."

In a blog post titled "How I Became the Most Hated Person in San Francisco, for a Day," Mayer confidently and proudly aligns himself with the likes of tech monsters Peter Shih and Greg Gopman. His reason for being so smug? The hits are pouring in and people are buying up the reservations he's squatting on.

What about ethics? We are talking about an asset that most people don't think about having a value. That doesn't necessarily mean that it doesn't have a value, or that people wouldn't be willing to pay for it. For instance, no one would have thought that taking a cab during rush hour should cost more than a normal ride, until Uber launched surge pricing and we realized that people are willing to pay for it. Clearly, the service of booking a reservation in advance has value to patrons.

The fact that he's charging for a service that restaurants already offer for free is no concern to Mayer. If people are willing to pay a middleman for a reservation and are comfortable using a fake name at the restaurant, Mayer doesn't see what the big deal is.

If someone does pay for it willingly, is it really unethical? The consumer has made a choice, the reservation stands, the restaurant gets a table filled as planned, and I have made money for providing the service. That seems perfectly ethical to me. I am aware that the ethical conundrum is around the "what if" question: If I book a table and no one buys it, the restaurant loses business, doesn't it? I don't know if that's true yet, and I'm also working at a volume so low that it probably won't matter. I'm canceling the reservations 4 hours before if they don't get bought, and certainly a restaurant that's booked weeks in advance won't have trouble filling a table with their high walk-in traffic, or someone who gets lucky and snaps up the reservation for free on OpenTable.

Of course, just because someone pays for a service doesn't make it make it ethical. These aren't "willing" transactions—not in the sense that that consumers have a choice. ReservationHop is merely cornering the supply of a limited resource (reservations at trendy restaurants) and juicing its cost.

Despite Mayer's unwavering defense, his judgment wasn't completely clouded by hubris. ReservationHop originally launched as service that openly advertised its scalping business model. Now, it promotes itself as a startup that "helps" restaurants by reducing no-shows.

As Mayer reluctantly conceded, his detractors "may have a point."

To contact the author of this post, please email kevin@valleywag.com.