Borrow These 8 Lessons From a New Entrant in the Sharing Economy
We have too much stuff.
The late and great comic, George Carlin, used to muse that we were a culture of stuff, collecting and keeping too much of it. We even have have large temperature-controlled storage facilities dedicated to keeping our stuff for us.
Over the years, an entire online sharing economy has sprouted from the idea of sharing stuff, from human capital to physical resources, often through simple collaboration. Some websites, such as Ebay and Craigslist, have long made it possible to sell your stuff online to strangers.
Newer companies, however, are creating networks that allow individuals to rent or lend their stuff. AirBnB found success creating a platform that allows individuals to rent unused space to traveling strangers, and Uber turned ordinary drivers in to taxis.
What about all of the other stuff we collect?
A new company, Baro, is attempting to create a network that allows individuals to profit from stuff they own. Like AirBnB and Uber, the network will match people with unused items in their home (or temperature-controlled storage units) with others with a short-term need for those items.
Baro creates a platform to rent your stuff.
There are a number of entrepreneurial lessons to be learned from Baro and other companies looking to tap into the "used stuff industry." Founder Lauren Graham discussed takeaway lessons she learned while starting Baro.
1. Look for pains
Like any company, you need to provide a product or service that solves a problem or relieves a pain. For Graham, the pain was an experience painting her home. After visiting Home Depot to purchase supplies, she was shocked at the cost for new equipment, most of which she would use only once. Instead of buying all of the equipment, she spoke with neighbors and was able to borrow everything she needed to finish the job. Baro was born.
2. Do your research
Entrepreneurs always believe they have great ideas. Unfortunately, too many entrepreneurs get cornered into idea lock or failing to see faults in their idea. After hatching the concept for Baro, Graham surveyed over 12,000 New Yorkers and found that a significant number of people had unused stuff cluttering their home and were willing to lend it out. In general, research by Rachel Botsman found that, on average, households had $3,000 of idle, rentable items. More important, it confirmed that there was an overwhelming demand for the service.
3. Invest in insurance
Renting the property of others is a risky proposition. For instance, AirBnB, which matches travelers to complete strangers with a bed to rent, got a slow start due to many investors seeing too much liability in the proposition. Entrepreneurs should certainly conduct a risk assessment to determine the viability of a sharing service and business insurance considerations should be made. Insurance agents want you to buy as much insurance as you can afford, so in addition to discussing it with your agent, seek out advice from other experienced entrepreneurs.
4. Sell your team
When searching for investment capital for your startup, remember that while investors seek opportunity, they ultimately want a team that has the ability and tenacity to execute. Assemble a great team and promote its strengths as well as the value that everyone adds.
5. Attracting talent
Like any startup, Baro bootstrapped to get started. To attract talent and not break the budget, Graham suggests promoting the experience of working with a startup, which can be exciting and energetic and typically attracts young and ambitious men and women who are hungry for an opportunity to be part of something big. Be willing to offer equity to those who have “sweated it out” to get your company off the ground, but be sure to vest the ownership over time.
6. Get launched
No company is ever perfect. Graham advises that companies, especially tech companies, remember that they will always be iterating and pivoting based on user needs and demands. It is far more important to get a minimal viable product in the marketplace for testing than to perfect it. Also, seek a control group of beta users who can and will offer critical and helpful feedback.
7. Expect the unexpected.
Graham originally started her company under a different name. Even after thoroughly researching copyrights, it was not until Graham had launched and even filmed a costly introduction video that she discovered they had a problem. Instead of fighting the challenge, Graham decided to simply change the name. Understanding that your company will face unexpected challenges helps you react better.
Time will tell whether Baro is successful, but the shift in the sharing economy to revenue-generating business models is a trend that is not soon going to change. With the right understanding and the proper preparation, opportunities exist for other entrepreneurs with similar ideas.
I wonder if there exists a market for used craft beer bottle caps? I could retire with that.
What do you think about the new sharing economy? Please share your thoughts and ideas in the comments section below.
Related: What's Next for the Sharing Economy?