The big announcement is that we’re starting a company (and no, it’s not travel related).
I promised that today I would share more about the business itself. This will be a very basic, high level view of the business, for those curious.
Saturday I gave a lengthy back story, and I mentioned saying that my desire was to be pursuing a business inline with our passions (reduce, reuse).
It began while sitting in the InterContinental Istanbul, waiting for our 11pm flight, and Carrie responded that she still felt like that business is a community equipment rental place…
Ever since graduating from art school (’08), Carrie realized she couldn’t practice learned skills like pottery, because no one she knows has a kiln, or even a pottery wheel.
This was now an annual conversation, and I always objected, usually because the unit economics aren’t great… but then added a random reason that would change our lives.
The irony is that my words were to explain why it wouldn’t work. It just seemed silly for us to buy these items when so many people already own them, and so many items already go unused. It would only make sense for those people who already own it, as they don’t need to make a profit.
If we could connect the people in need, to another’s abundance…
By nature of having so many items, most things go unused most of the time. A drill gets used an average of 13 minutes in its lifetime, and even on the high end, cars get used 8% of the time.
Peer to peer renting of items… that’s how it started out. (Or stumbled out).
There should be a network for people to list their valuable items for other people to rent.
For the next week we would say to each other, “wow, we have done this our entire lives”, or “wow, this is the intersection of all our passions”. In many ways, we’ve spent so much time connected to the subject, working on similar projects. It’s a wonder the conversation didn’t play out this way when we first discussed the idea 5 years earlier.
The Value Proposition For Renters
For the owner, it’s simple: there is no site with mindshare for users to list items for others to rent. (No, Craigslist doesn’t have a renting section).
But also, the value proposition for a renter is better renting from your neighbor.
The following sums up the traditional rental industry vs peer-to-peer:
($500m / yr)
|Not Bookable Online||Bookable Online|
|10% Retail Cost / Day||3% Retail Cost / Day|
|3 Locations in Austin||Hundreds of Homes|
In other words, traditional rental industries are billion dollar industries – just Home Depot alone does half a billion dollars a year in rentals alone. And to be clear, we’re not just talking tools, but other verticals – like cameras or audio/visual.
Ease Of Use
But here’s the kicker. These traditional rental industries aren’t even bookable online! In 2016. Not even Home Depot.
Billion dollar business… not bookable online. It’s the rare intersection of high-demand (from users) and uncompetitive (from other businesses).
We’ve noticed looking at cameras on our partner platform that people tend to list items for ~3% of retail cost.
However, the same items at traditional rental stores rent 10% of retail value, and that’s per day. This is also normal with Home Depot too. (Again, uncompetitive with pricing).
A peer-to-peer rental system would mean that renters would spend 30% compared to normal rental stores!
Location Density and Item Optionality
Then consider that significantly more items are being sold to people in Austin than rented. It’s true anywhere. There are significantly more items owned by regular people in the average neighborhood, than there are for rent at the Home Depot.
This means a huge improvement to density and item optionality. Plus, we can go into niches were there is no competing traditional rental industry.
As the CEO of Ford recently said, “When something becomes more available to people, and at a lower cost, guess what? They use it more.”
What happens to our view of renting, when renting is 1/3 the price, much easier to book (just by being online), items have better location density, there’s better item optionality, and you can now rent items previously not available for rent?
You use it more.
And the improvements aren’t small either!
For this, you can assume a multiplier, especially with such a huge price improvement for the user. But these multipliers compound on each other.
In simple terms, people already spend billions of dollars on rentals in different areas (tools, cameras, etc…). But as our network overtakes the traditional industry in terms of value, more people use it… which increases the value of the network (“network effects”), which means more people will use it. And around the flywheel goes.
That is how we can eventually start to live out the mission…
Our mission is to make renting so cheap and easy that it is one day preferred to ownership.
The reason you prefer owning items is simple: it’s currently easier and cheaper. Period.
There’s a saying, “you want a hole, not a drill”.
It’s true, renting competes to be the best solution for a need. And currently paying for the entire thing, and storing it, is the easiest solution.
But imagine pressing a button and soon having your chosen item at your door step, and for a fraction of the cost.
You would rent more.
Renting Requires A Unique Approach
Big improvements to price, ease of us, density, optionality, and possibilities… If we’re talking 100x improvements, why hasn’t it existed yet?
Well, there’s not just one reason. Timing is huge. For example those who started something similar years ago, couldn’t have added many of our core features.
Also, most of these other versions (and there have been a lot), never even attempted their business full-time, including some I think really could have made it work.
This is not a side project, but a very high caliber attempt in effort, strategy, product, and team.
Among many reasons, I was most shocked that no one was doing any of the features I knew were needed. Basically, everyone took the craigslist approach – just create a marketplace and let people use it.
However, why is it that Craigslist doesn’t have a renting section?
Renting is more complicated – you want your item back and in the same condition. This is a major concern for people that the Craigslist model doesn’t address.
All our testing and research has proven that we have the solution people need. (Unfortunately, I have to remain vague about some of the long term technologies).
The more we think about it, the more we research, the more we test things… the more I know I’d be a fool not to go all-in.
From day 1, it was obvious we would need a great team.
When we started seriously considering doing this, I called a few highly intelligent friends who I thought might be interested and told them about the idea. One of the first people I called was my friend Ed (who designed programs specializing in geospacial predictive modeling, like a program predicting road side bombs in Afghanistan).
After my lengthy explanation, he said, “I’ve actually been thinking about this”.
And that’s the reason we’ve been able to peak the interest of incredibly smart people, and it’s the reason we’ll succeed: this is a passion project.
Carrie is a great usability designer, and will do front end coding… but we knew we’d need a great technologist.
Also, Daraius introduced me to his friend David, who was the smartest guy he ever met – also a Kellogg MBA, was a senior at Booz Allen, and reorged Dell. As I already explained, his reaction was that this was a big idea, and he really believed in my vision for it (enough to be COO).
And again, we all have a similar passion for reduce, reuse, and the economical impact of an efficiency increase. And that… is luck.
We’ll finish building the product, and then we’ll launch in Austin, TX. That’s all I can say for now.
I’ve asked for support from the travel community at this time, and a number of people have asked how they can help… and I’ll share 3 quick details.
Perhaps a long shot, but if you know accredited angel investors, send them my way. We’ll certainly launch and prove this thing out either way. Although, toward the [relatively small] funding goal, I’d prefer to raise a little bit more.
As you can imagine, this is a frugal group, and our burn rate is incredibly low (we’re certainly not taking a salary at all). We aim to keep it low.
But, we will be hiring a full-stack / back-end programer to help build out some of these features.
So if you’re interested in working in Austin on a below average salary, but above average equity… click here and fill out our form. 😀
Or if you know someone who might be interested, send them here as well.
Beyond that, we’re not looking to hire anyone else right now. Hopefully we can get by for awhile giving out equity.
3) Thanks for the encouragement!
(For details relating to the transition or blog, aspects not related to the business, see the last post.)
I don’t expect everyone to “get” our idea, jive with it or think themselves to be ideal users. That’s totally, sincerely cool. (Bikeguy once said, if our community loves your product, you should be concerned). 😀
Maybe some people think this is a little crazy. That’s cool, I’m totally used to that. Sometimes I agree, after doing full-time travel (2015 included 23 countries: Hungary, Austria, Oman, Kenya, Jamaica, China, Ukraine, Latvia, Estonia, Finland, Croatia, Montenegro, Bosnia & Herzegovina, Slovenia, Serbia, Bulgaria, Turkey, Egypt, South Africa, Namibia, French Polynesia, Australia, and Myanmar).
Still, people have been incredibly supportive of our decision to do this. And perhaps knowing it could be a tough/stressful while for us, people have been incredibly encouraging.
For the kind words, and the people wanting to help… thank you. The sincerest of thank yous. You guys are awesome.
The biggest thing for us, has just been all the support. Now, and through the years. This isn’t something I forget.