Three years ago, I was inspired to start a business built around sharing—people literally laughed.  Two years ago, I launched a rudimentary prototype for Rentcycle, an online marketplace inspiring reuse through renting—people started listening.  One year ago, I presented Rentcycle on a panel of similar companies about a brand new concept called “Collaborative Consumption”—people got it; investors started taking my calls.  This summer, Rentcycle raised $1.4 million to change the way society consumes.

During the past few years, there’s been a groundswell of awareness around a megatrend anchored in sharing.  Call it Collaborative Consumption, The Mesh or The Sharing Economy, the main premises are consistent—usership versus ownership; access over excess; and experiences trumping possessions.  Two best selling books (What's Mine Is Yours, The Mesh) have been written on the topic, the concept has been featured in every mainstream media outlet you can think of, and it’s starting to have an impact on the choices people make in their daily lives.  It wasn’t long ago that people bought every single movie they watched.  Services like Netflix have transformed the concept of media ownership and consumption.  Similarly, ZipCar and HomeAway have changed the way we gain access to vehicles and vacation homes, respectively—both enjoying successful IPO’s this year.  And it doesn’t stop there.  A new wave of startup companies are waving the flag for the sharing economy—and believe it or not—investors are right there with them.

Typically, the word “share” isn’t the first word you associate with investors.  Visions of Scrooge McDuck diving into his money vault are more commonplace.  The idea of sharing almost feels counter-intuitive to an industry prided on having the greatest ownership stake in companies.  That said, The Sharing Economy has attracted the attention of investors, who are pulling out their wallets and writing big checks.  So, why are venture capitalists suddenly interested in sharing?  As you’d expect, it comes down to money.  Recently, Fast Company Magazine estimated The Sharing Economy to be valued at $100 billion—and that’s only the peer-to-peer opportunity, which doesn’t account for the professional sharing opportunity of similar size.  Led by veterans like Netflix and ZipCar, the movement promotes sharing through renting, bartering, lending, trading, gifting and swapping.  Recently, companies have been able to establish solid business models where healthy revenues could be gleaned from the idea of sharing.  That's when investors started listening.

Every movement needs a poster child—someone to blaze the trail for others.  For Collaborative Consumption, I’d venture to say that Airbnb was the trailblazer that really changed the way investors viewed the sharing space.  If you’re not familiar with Airbnb, it’s a peer-to-peer marketplace for sharing space—everything from a couch, a room in an apartment, an entire house.  They’ve built a community to make it easy to rent out extra space and have recently reached a tipping point.  Just a few months ago, Airbnb was valued at $1 billion, raising $100 million from the top investors in the venture ecosystem.  Although the Collaborative Consumption space had been growing steadily up to this point, it seemed as though this validation opened the floodgates among the investor community.  Suddenly, startups were popping up left-and-right, branding themselves as “the Airbnb for” cars, food, skills, jobs, anything. 

With this, Collaborative Consumption became part of the standard vernacular for investors, who created new markets to follow the space in places like AngelList and who touted the movement as a new investment premise.  This wasn’t just a passing fad for a handful of investors—some of the biggest names in Silicon Valley and beyond were defining their portfolios and investment philosophies based on Collaborative Consumption.  Clearly, Andreessen Horowitz made a major statement by taking the lead with Airbnb.  But we’ve seen similar statements from others.  David Lee from SV Angel appeared on Bloomberg, naming Collaborative Consumption as one of the firm's top 3 investment focuses.  Funds like Shasta Ventures, Floodgate and Google Ventures have made major investments in sharing companies, like RelayRides, TaskRabbit, Chegg, Zimride and others.  I can personally attest that nearly every single investor I talked to throughout the fundraising process (this past summer) knew the phrase "Collaborative Consumption" compared to zero awareness less than a year prior.  

Not only are existing funds taking a new found interest in the space, but one fund has decided to place a big bet on the space by investing exclusively in the most promising Collaborative Consumption companies out there.  Collaborative Fund was founded by Craig Shapiro with a mission to extract as much value and productivity from things like food, equipment and even skills.  The fund enlisted the expertise of Rachel Botsman, author of the Collaborative Consumption Bible, What’s Mine Is Yours, to join as Venture Partner.  As this recent Fast Company article explains, Rachel was an unlikely VC, but her keen eye for spotting trends and understanding the reasons why some sharing services succeed while others fail, was just what Collaborative Fund needed to act as the seal of approval on the space.  Investments in companies like TaskRabbit, SkillShare, Kickstarter, Gobble and even Rentcycle show their philosophy in action.

The past year has seen the rise of the sharing economy.  Airbnb is now a household name.  P2P car sharing service RelayRides raised $10 million, hired a prominent CEO and inked partnership deals with GM.  Their competitor, Getaround won TechCrunch Disrupt and is quickly closing in on ZipCar’s total inventory.  We’ve seen similar successes with job outsourcing companies like TaskRabbit and Zaarly.  Lots of money is being raised and being invested toward impressive growth.  Collaborative Consumption is quickly becoming a hot investment space.  But investors are not just throwing money at anyone who promises to be the next Airbnb.  The diligence process is heavier for sharing companies since conflicts related to trust and reputation are tricky to overcome.  There are also important X-factors that allow some sharing communities to thrive while others struggle.  These are the intangibles that investors need to consider when making their investment decisions.

The good news is that Collaborative Consumption startups from around the world are finding creative ways to overcome obstacles and are building sharing businesses that actually make money.  This ingenuity is inspiring investors to reach deep into their pockets and do some sharing themselves.  Who doesn't love the promise of a shared upside?  

* Full disclosure: Rentcycle’s investors include Collaborative Fund, SV Angel and Andreessen Horowitz who are mentioned in this post.

Many ask how the idea for Rentcycle came to be.  I’m not from the rental industry.  I’ve never started an Internet company before.  So, how is it that I got here?  Although a combination of factors truly helped the stars align for Rentcycle, there’s one major influence that planted the seed for the idea—my first job out of college at Red Hat, the open source technology company.

For those who don’t know, Red Hat is the world’s leading provider of open source technology, namely the Linux operating system.  The idea behind open source is that source code is shared among a community of developers so that anyone can contribute to its advancement.  The technology is provided for free with paid subscriptions to high quality support.  This contrasts against proprietary technologies where development happens in a closed environment behind corporate firewalls and customers are charged per license with limited access to support.  The idea is that open source offers choice and access.  It invites participation and thrives on it.  And everyone who participates reaps the rewards. 

Working on the Brand Communications team at Red Hat, I was tasked with telling this story of shared access to the masses.  Their brand story was one of the strongest I’ve seen—you might enjoy taking a peek at Red Hat’s Brand Book or watching the video version.  Red Hat was all about creating a movement, using the principles of open source to inspire change beyond technology.  Red Hat’s efforts with the GPL, Creative Commons and The One Laptop Per Child initiative are great examples of such impact.  It didn’t take long until I adopted a spirit of openness and sharing into my own personal brand.  

After three wonderful years evangelizing Red Hat’s mission and values, I moved cross-country to San Francisco.  But the values of open source stuck with me.  Two years later, I drafted a business plan based on sharing resources through renting—Rentcycle was born.  Simultaneously, another movement started getting attention.  It wasn’t open source, but it was strikingly similar.  Principles were built around a similar dedication to transparency, community and trust.  Access was praised over ownership.  Though I didn’t fully realize it at the time, the Collaborative Consumption movement mirrored the values behind open source in more ways than one.  I've written extensively about Collaborative Consumption in previous blog posts which you can found here and here.  Although each has its own missions and goals, you can’t deny the overlap between Collaborative Consumption and open source.  Below are five shared principles between open source technology and Collaborative Consumption.  Without such inspiration, who knows where Rentcycle would be.

1. It’s better to share.

Red Hat always preaches, “Your mother was right.  It’s better to share.”  This simple lesson is at the core of open source since the source code is distributed and shared among a community.  Sharing means doing more and accomplishing more as a community versus individuals.

Collaborative Consumption (CC) takes a similar stance by promoting access to shared resources.  The resources of a community are stronger than those of any individual.  By sharing the resources of many, each individual benefits.  And everyone who participates reaps the rewards.

2. Bring together a global community.

The open source movement is based on a community of contributors.  The more contributions, the stronger the community becomes.  All are welcome to participate.  In fact, the more perspectives, the better.  Because diversity of perspective is what makes the code stronger.

Community is the corner stone of Collaborative Consumption.  A resurgence of community is one of the driving forces behind the movement.  But, like any community, it is only as strong as its contributors.  A network effect can only be achieved through collaborative participation.  Diversity of participation offers diversity of choice, which is vital for CC communities.

3. Respect is earned.

Red Hat talks about a dedication to meritocracy where recognition is given to those with the greatest ability and talent.  Performance is tied to action and has nothing to do with names or titles.  As they always say, “May the best idea win!”

This idea of meritocracy and earned respect is in keeping with CC’s concept of “reputation capital.”  This term was coined by Rachel Botsman to describe the aggregation of one’s online activities in order to build a trust index for an individual within collaborative communities.

4. Release early, release often.

The beauty of open source technology is that it inspires innovation.  We all know that three heads are better than one.  By sharing tasks among a community of developers, open source software can be developed at a faster rate than any individual.  Mistakes are made faster, corrected by the community faster, which allows innovation to happen faster.

Elements of the ‘release early and often’ mantra are built into CC since Collaborative Consumption is all about using technology to catalyze widespread change.  CC companies are pioneering new ways of exchange through communal technologies.  It may take a few attempts to perfect the best model, but progress can’t happen without taking a first step.  This is how CC is innovating and disrupting mindsets.

5. Don’t sell a product, deliver a service instead.

People often ask, “How does Red Hat make money selling free software?”  The truth is, they aren’t selling software.  That part is free.  Rather, Red Hat delivers a service in the form of a subscription.  Customers pay for access via subscription.

The Collaborative Consumption movement evangelizes “Access instead of ownership.”  Rather than own a car, rent one when you need it or borrow one from your neighbor.  Pay for access when you need something; don’t pay for it when you don’t.  This is the service promised by CC companies and it’s starting to catch on.

What would we do without Craigslist?

Each day, more than one million people turn to this old-school classifieds site to sell couches, find apartments and give stuff away to perfect strangers.  Craigslist represents communal living at its best—two anonymous parties with complementary needs facilitating exchanges in-person.  It’s convenient, it’s cost effective, it’s neighborly.  Sixteen years after its founding, societal acceptance of a service like Craigslist is a no-brainer.  But this wasn’t always the case.

Started in 1995 as a humble email listserv for local San Francisco residents, Craigslist was far from an overnight success.  In fact, the company idled for five years in San Fran before expanding to a single other city.  Considering the destination site Craigslist has become, it’s hard to imagine why it took so long for things to really take-off.  Why wasn’t it until the year 2000 that mainstream society was able to get behind the idea of community classifieds?  In 1995, consumers were not prepared to arrange anonymous meetings with strangers to buy products in-person.  So, what changed between 1995 and 2000 when Craigslist started to expand beyond its first market?  Well, several factors came into play, but two companies in particular—Amazon and eBay.

In 1994, Amazon got consumers comfortable using the Internet for the purpose of shopping.  Amazon single-handedly brought online shopping
mainstream.  In 1996, eBay got consumers comfortable using the Internet to buy used goods and have them delivered to their doorsteps.  eBay allowed purchases from complete strangers without having to meet these people—the transaction was completely faceless.  After several years priming consumers to become comfortable buying online (Amazon), then buying second-hand goods from strangers online (eBay), the time was finally ripe for Craigslist to take flight.  With the proper stepping stones in place, Craigslist was able to successfully use the Internet to facilitate exchange between strangers offline.  From 2001 through 2011, Craigslist has experienced exponential growth.  But it was all about timing and it was all about easing consumers into change.

Craigslist is a great example of a successful peer-to-peer network.  For context, peer-to-peer (P2P) networks connect individuals with other individuals.  The main premise behind P2P is that a network of individuals becomes more powerful and more robust as the resources of these individuals are shared.  Craigslist has proven this to be true, but reaching the required tipping point for acceptance may have never been possible without Amazon and eBay paving the way.  Society couldn’t have jumped straight from offline purchasing of new goods from established companies to online facilitated purchasing of second-hand goods from strangers met in-person.  It’s too great of a leap to make all at once.  Craigslist needed a bridge in order to succeed with mainstream consumers.  Such is the case for all P2P communities.

Feeding off the momentum of Craigslist and P2P exchange, entrepreneurs identified the potential for a similar model applied to other types of commerce.  Thus, during the past ten years, P2P communities were formed around swapping, trading, bartering, gifting, sharing, lending and renting.  The first few (swapping, trading, bartering, gifting) are one-way exchanges, meaning a product can be transferred from one party to another and never be returned.  Similar to a purchase where all transactions are final, these one-way systems can more easily ride the coat tails of Craigslist’s success.  For this reason, many one-way P2P collaborative consumption communities have gained traction because they are a continuation of the Amazon-eBay-Craigslist bridge that has been put in place.

The latter group (sharing, lending, renting) is in a different category since these systems involve two-way exchanges.  This means a product is transferred to a party temporarily and (hopefully) returned in the same condition.  The two-way nature of these P2P communities require an entirely new bridge because they represent an entirely different type of commerce.  What goes out, must come back.  Further, there’s a distinction that makes renting particularly tricky compared to sharing/lending and that factor is money—renting not only involves the exchange of goods, but money changes hands as well. Not only are you assessing the value of a good at the time of exchange, but you expect to get that good returned in the same condition.  This makes renting the most complex type of P2P exchange since money opens the door to things like disagreement, dispute and litigation.  It’s a whole new ballgame; and a whole new bridge.

For those new to this blog, I'm the Founder of a company called Rentcycle.  Truth be told, the original business plan for Rentcycle was to build a peer-to-peer rental marketplace.  Who doesn’t love the idea of renting out an idle lawnmower to a neighbor in need?  Or paying to use a friend’s boat for the weekend without the headaches and expenses of ownership?  I can't say I was the first person to think up this brilliant idea—dozens of startups had come and gone, falling short on the dream to bring community renting to the masses.  I spent months crafting business models, talking with friends, conducting market research and investigating the successes and failures of similar concepts.  I experimented solutions that tapped into social graphs in an effort to establish trusted rental networks.  I brainstormed reputation systems where users were constantly monitored as both owners and renters.  Despite my best efforts, I continued to run into the same roadblocks regarding trust, liability and an overall perception that society wasn’t ready for temporary exchange between strangers.

Thinking about the series of events that made Craigslist possible, a solution suddenly dawned on me.  In essence, Rentcycle was trying to build a rental version of Craigslist.  As Craigslist proved, a new form of P2P exchange is unlikely to succeed without first easing consumers into the change.  Stepping stones and baby steps would be required to get consumers comfortable with the process of renting between peers.  If the P2P bridge theory holds true, there would need to be a rental version of Amazon or eBay before there could be a rental version of Craigslist.   Eureka!

The nice thing about the rental space is that there is already an entire industry dedicated to renting.  Not only is there an industry, but there is a BIG ($85B) and GROWING (11% CAGR) industry.  The only problem is, this industry does not fully operate online nor does it make it easy for consumers to rent in the same way that they shop online.  So, logically speaking, if Rentcycle could recreate for renting what Amazon and eBay created for buying, it could potentially bridge the gap to P2P renting.  Start by getting consumers comfortable renting from professional businesses (B2C) who have the policies in place to handle the complexities of a rental transaction.  Once there is a comfort level with renting and Rentcycle acts as the trusted destination where consumers are used to renting, then perhaps consumers will be ready for the next step.  It’s all about baby steps and doing what’s right at the appropriate time.  Which is why Rentcycle made a major pivot to its business model and is now exclusively focused on the highly compelling B2C rental opportunity.

The bridge theory has already been proven by many P2P networks where the proper stepping stones were already in place.  Think about the rise of peer-to-peer investing.  The Lending Club has issued more than $170M in personal loans since 2007.  Impressive!  But would this have been possible without first achieving a certain level of comfortability with online banking?  The rise of sites like AngelList could be another potential stepping stone on the bridge to peer-to-peer lending.

The model has even proven applicable within different sectors of peer-to-peer renting.  Take the car rental space.  Car rental companies offered reservations online, then travel sites like Kayak aggregated this data for easy comparison, then corporations like ZipCar made cars more accessible in everyday life.  This evolution has paved the way for P2P car rental with car sharing companies like RelayRides enjoying strong early traction.

The hotel space is another great example with AirBnB.  First online hotel booking, then travel aggregators, then vacation rental sites, now AirBnB, a place where peers rent rooms, apartments and homes from each other.

Bridges can take many forms, but their purpose is singular—to ease society into major changes in mindset and behavior.  Craigslist represents a story about the evolution of buying—from offline businesses to online businesses to online individuals to offline individuals.  Rentcycle looks forward to a similar evolution for renting, but we have to build the bridge first.

Babies are one of life’s joys.  But having one doesn’t come without its share of change.  Change of lifestyle.  Change of mindset.  Change of priorities.  For 9 months, ‘life as usual’ is put on-hold in preparation for the newest member of the human race.  Futons are replaced with cribs; convertibles with minivans; bottles of beer with bottles of formula.  This transition into parenthood carries some major implications—especially for the woman.  As baby grows, so grows mom-to-be.  An expanding waistband usually means an expanding wardrobe too.  But with all the other pregnancy to-dos, who has the time, space or money to invest in new clothing?  And what happens to those clothes after the woman shrinks back to pre-bun-in-the-oven size?  Thanks to some innovative new businesses, renting comes to the rescue once again.

Previously, I’ve blogged about the novel concept of designer dress and handbag rentals.  In a matter of months, these rental fashion phenomena have made their way into pop culture, both on the big screen (in the latest Sex In The City movie) and on the Red Carpet (at last month’s Emmy Awards).  Despite this impressive rise in popularity, fashion rental companies are still in their first years of business.  As such, most are limited by the variety of inventory they can carry, offering only the most common sizes and styles for rent.  Identifying a clear gap, several mom-minded entrepreneurs have extended the fashion rental concept to service a niche market—chic pregnant women. Turns out, it’s a bigger category than you might expect. 

Three websites have emerged as leaders in the growing space of maternity rental wear—Rent Maternity Wear, Belly Bump Boutique and The Maternity Closet. Their feeling is that women make enough sacrifices during pregnancy—fashion doesn’t need to be one of them.  The services offer a wide range of maternity clothing at a fraction of the cost of buying.  From on-demand dresses for special occasions to a seasonal selection of everyday garments, maternity rental companies make it easy for moms to stay on top of the latest fashions without breaking the bank.

During the past 9 months, I’ve been lucky enough to witness the miracle of life first-hand as my wife, Suzy, readies for the big day (it’s literally “any day now” with the due date set for Halloween).  Considering she’s married to “rental dude,” Suzy is occasionally the guinea pig for my rental experiments.  In preparation for a recent baby shower, I encouraged Suzy to rent her maternity dress.  It made sense to her—why would she buy a dress she would only wear once?  She decided to use Rent Maternity Wear, a company she had encountered at a recent Maternity Expo in San Francisco.  In a matter of minutes, Suzy was able to quickly search, compare and rent the maternity dress of her choice, all without having to get off the couch.  She had a full selection of designers and styles to choose from and she was able to find the perfect gown.  A few days later, a package arrived with 2 dresses inside (they send 2 just in case the first size doesn’t fit).  The company gave her 1 week to use the dress before returning in a self-addressed envelope and dropping in the mail.  The whole experience was very reminiscent of Netflix.  And the dress was the hit of the party!

Just another great example where renting makes sense for temporary use.  I continue to be pleasantly surprised by all the things in life we no longer have to own.  Shared access and collaborative consumption are the future and it makes me smile to think our baby will grow up in this sharing economy.  

Stay tuned for a blog on baby rentals (cribs, strollers, toys) in a few months :-)

Whenever aspiring entrepreneurs entertain the idea of starting a company, one of the first questions that comes up is, “How do I fund this?”  With the rise of the Internet, web-based businesses have exploded.  The nice thing about technology startups is that, unlike capital-intensive industries, websites can be developed with virtually no up-front money required.  This has led to the birth of the lean startup where businesses operate with little more than the bare essentials.

As an Internet company, Rentcycle is proud to call itself a “bootstrapped” startup.  This means we are self-funded and operating in the leanest possible way.  We spend as little money needed to execute against our highest priorities.  We wanted to share some of our most successful tactics for pinching pennies in order to extend our runway.  You might be surprised just how much you can do with little to no capital.

No office space.
 
Why pay for an expensive office space when you can just as easily work out of team member apartments or local coffee shops?  In the early days of a startup, the founding team is usually under 10 people, typically less than 5.  This allows flexibility when it comes to workspace.  Rentcycle holds its meetings in the founders’ apartments, which saves thousands of dollars that can instead be invested in more essential business priorities.
 
Free collaboration tools.
 
Gone are the days of landlines and voicemail.  Today, anyone with an Internet connection has access to voice and video collaboration tools for free!  Thanks to services like Skype and Google, a company’s collaboration potential is virtually limitless.  Rentcycle collaborates via Skype, Google Chat, Google docs, e-mail and more.  Meaning our collaboration expenses are nil.
 
Free software and web hosting.
 
Many companies realize the growth potential startups present to an economy, but acknowledge these fledgling businesses don’t often have the capital required to utilize enterprise-level services.  As such, many companies offer free services for a set time period in hopes of starting a relationship with a long-term customer.  Rentcycle is part of Microsoft’s BizSpark program.  This provides 3 years of development, design and management software, not to mention, free hosting.  It’s true that nothing in life is free, but three years free gives us time to become profitable so these costs can be justified down the road.
 
Home-grown PR.

The neat thing about startups is that they have compelling stories to tell.  Startup companies are all about innovation, solving problems and pursuing “The American Dream,” which are generally topics the general public enjoys.  This puts startups in a fortunate position to pitch the media since the press is always looking for fresh content to drive more readers.  There are many ways to get a startup “out there,” and success usually comes down to level of effort.  A good start is to write a blog about your company and the need you’re serving—find relevant news and events and provide commentary on how these things relate to your startup vision.  This content can be distributed among the social media channels and can be targeted toward specific groups.  For the more noteworthy announcements, you can write press releases using free web PR wire services that can be distributed to select media outlets.  Taking this a step further, you can also create a list of target publications, track down their contact information and distribute this content individually to get on the media radar for upcoming stories.  There are even events specifically geared toward startups in the form of contests or demos that attract specific media outlets and often result in free publicity.  Rentcycle has enjoyed its participation in these events, not only for the networking, but also for the great buzz created.
 
Commitment to “the cloud.”
 
The future of technology is the cloud.  Not only because it is so efficient, but also because it is so cheap!  Today’s startups are fortunate to leverage cloud services which provide levels of computing access that would otherwise be cost-prohibitive for young companies.  Through the cloud, server costs are minimal because resources are shared.  Rentcycle is built atop Windows Azure which is powered by Microsoft to deliver a scalable web server infrastructure.  We also utilize cloud services such as Google Apps and Salesforce to lower purchase and maintenance costs internally.
 
Team of interns.
 
In today’s competitive job market, experience is key.  Each year, thousands of candidates enter the job market in search of on-the-job training to get valuable experience and figure out what they want to do for their careers.  These hungry, eager, passionate individuals thrive in startup environments where they get the chance to wear many hats and explore several areas of a company simultaneously.  Rentcycle currently has more interns than employees.  We have a creative team putting together wonderful animations and videos that add depth to their portfolios.  We have a marketing team that helps grow our business while growing their resumes.  Working with interns is also a great way to “test-drive” individuals as potential future employees.
 
Commission-only, independent sales reps.
 
The best sales representatives are those who are results-oriented, self-motivated, independent, and confident in their sales ability.  Salespeople want to be financially rewarded based on specific impact they bring to an organization.  Since Rentcycle’s business model is pay-per-performance, we’ve structured our sales team under the same premise.  Sales reps get paid when Rentcycle gets paid—it’s that simple.  Using a commission only model saves on hiring costs and attracts only the most results-oriented sales force.  In today’s economy, this model is quite common. 
 
Free consulting and advice.
 
The great thing about the entrepreneurial community is that founders look out for each other.  Those who have “made it,” often want to “give back” since they know the struggles associated with getting a new venture off-the-ground.  This expert perspective can be invaluable and veteran entrepreneurs enjoy sharing their experiences with first-timers to help pay-it-forward.  During the past year, Rentcycle has identified several target individuals with business experience that closely parallels our model.  Leveraging the power of professional networks like LinkedIn, we have been able to request introductions to executives at the highest levels.  We’ve found it never hurts to ask—chances are you will get the meeting and advice required to take your venture to the next level.
 
Accelerator versus MBA.
 
During the past few years, startups accelerators have provided the resources required for first-time entrepreneurs looking to start a business.  From Y-Combinator to TechStars to MassChallenge, accelerator programs can be found in nearly every major city across the country and world.  These programs act as a crash-course in how to start a company and are commonly referred to as “MBA for entrepreneurs.”  Often led by successful entrepreneurs themselves, these programs cover everything from “I have an idea, now what?” to “How do I pitch investors?”  Rentcycle attended The Founder Institute in Silicon Valley which provided a wealth of training specific to entrepreneurship and plugged us into the startup community.  Rentcycle is also part of the MassChallenge accelerator program in Boston.  MBA degrees are no-doubt valuable, but with tuition and cost-of-living expenses exceeding $200K, it’s difficult for an entrepreneur to justify when this money could be invested into starting a business instead.  Though each accelerator varies in time and investment, these programs get the job done in a shorter period of time and for virtually no money compared to traditional MBA programs.
 
 
This blog post was written by Kevin Halter, Co-Founder and VP of Sales at Rentcycle.  Rentcycle is an online rental marketplace, where consumers can rent anything from local rental businesses.  Rentcycle helps local rental businesses reach new customers, generate more revenue, and run their business online.

There’s a pivotal moment in a startup’s lifecycle when emphasis shifts from product to customer.  Focus becomes less about building code and more about building relationships.  It is this moment when a startup is put to the real test—in the hands of its target users.  Sure, the product will always be the foundation of the company, but it is the feedback from these initial customers that will fuel future development.  This is when things get very real since customers are what bring products to life.  It’s an exciting time for any company and, as of today, Rentcycle is one step closer to this milestone.

Meet Kevin Halter, Rentcycle’s newest Co-Founder and VP of Sales.  Kevin brings passion and enthusiasm to this key customer-centric role.  A natural connector, Kevin prides himself on relationships.  He loves solving problems and improving the lives of others through innovation.  Kevin will be interfacing with rental store owners to service their online business needs.  He will be spearheading all business development efforts and will be running Rentcycle's sales organization to ensure a scalable go-to-market strategy.  Kevin has already shown great leadership and is helping set the vision for the company.

For the past seven years, Kevin was a top performer at Pfizer Pharmaceuticals where he worked intimately with medical clients to meet their ever-changing needs.  He led sales in his region and established a deep and trusted client network.  Kevin brings this same spirit and drive to the rental industry, which is a vibrant and growing space.

A skilled problem-solver, Kevin studied engineering at Tufts University.  Kevin enjoys anything outdoors.  He loves to cycle, run, swim, kayak, scuba, dive, ski and go camping (good thing he lives in Northern California).

Welcome aboard, Kevin.  Rentcycle looks forward to making the transition from product to customer.  The timing couldn’t be more perfect!

They say great minds think alike.  If this is true, I experienced nothing short of greatness at last night’s Collaborative Consumption Summit in Boston.  Hosted at Bentley University, the event was attended by like-minded individuals who, like me, are part of a movement from ownership to usership; from individual buying to shared access; from independent consumption to collaborative consumption.  Collaborative consumption explores the explosion of sharing, bartering, lending, trading, renting, gifting and swapping, which are reinventing not only what we consume, but how we consume.  As I’ve written in previous blogs, the motivations behind renting are less about owning things and more about accessing the things you need, when you need them.  There’s a quote that says, “you don’t need everything you own and you don’t own everything you need.”  Turns out, I’m not the only one who subscribes to this belief.  For two hours in Boston, this was the collective mindset—hence, the motivation behind the Collaborative Consumption Summit.

Organized by Bentley alum, Jeff Bennett, the event brought together thought leaders from different areas of collaborative consumption to share perspectives.  Jeff himself is CEO of Swap.com and represented the swapping point-of-view.  Jeff moderated a panel which included (fellow MassChallenge finalist) Shelby Clark, CEO of car-sharing service, RelayRides; Aleece Germano, Founder of The S.W.A.P. Team; and myself to represent the renting angle.  The panel was also joined by a very distinguished guest, Rachel Botsman, author of the new book, What’s Mine is Yours: The Rise of Collaborative Consumption.  Rachel, along with her co-author Roo Rogers, has spearheaded this movement and is touring the globe, singing the praises of communal systems.  Armed with countless examples of companies who are leading the way for sharing, her story is powerful.  Her delivery is spot-on.  And she knows how to make an impact. 

The evening opened with a riveting presentation about the movement toward collaborative consumption and how it is changing the world.  Rachel threw out some great statistics, including one that’s near and dear to my heart—did you know the average power drill is used for 12 minutes in its lifetime?  12 minutes!  Yet over 60% of the U.S. population owns a power drill!  Rachel went on to explain that it's not even the drill that we need—it’s the hole the drill makes that we need.  Our use of products is less about the product itself and more about the experience that product delivers.  In her book, Rachel describes the changing relationship between physical products, individual ownership and self-identity.  “We don’t want the CD; we want the music it plays.  We don’t want the answering machine; we want the message it saves.  We don’t want the DVD; we want the movie it carries.  In other words, we don’t want the stuff but the needs or experiences it fulfills.” 

Moving into the panel, the conversation continued, covering everything from the importance of reputation and trust in collaborative models to the inherent challenges of collaborative consumption.  Each of the panelists shared direct experiences and metrics from their own companies and took questions from the audience.  In a particularly compelling dialogue, the panel debated the role of community in executing a collaborative model.  Each panelist touted the pivotal role community plays in their success.  RelayRides shared stories of how each car that participates in RelayRides has a personalized note from the owner and that the cars are often given personal names, like “Shelby’s car” so that renters feel part of a community, rather than a faceless transaction.  The S.W.A.P. Team talked about how their organized swap meets rally immeasurable support from donors and lead to donations that positively impact local communities.  Swap.com referenced how swapping is one of the most natural forms of exchange that goes back to swapping sandwiches in grade school and that these same values are built into the virtual community that exists on Swap.com.  I spoke about brand and the importance of building a community around a brand.  In Rentcycle’s case, it is less about Rentcycle the company and more about the values Rentcycle stands for.  We strive to build a community around renting that promotes the positive benefits renting derives.  From cost savings to space savings to environmental impact, the renting community (like other collaborative consumption communities) is built around empowering individuals.  At the end of the day, we are all trying to change consumers’ mindsets, and it takes a village.

The night capped off with a motivational speech by John Harthorne, Founder of MassChallenge.  MassChallenge is the world’s largest startup competition that provides tools to promising, high-impact startups.  Rentcycle is fortunate to be included as a finalist in the competition and has enjoyed its participation in the Boston accelerator.  John spoke confidently about innovation and how “now is the time” to start something.  Citing several indicators that correlate periods of recession with times of great transformation and growth, John applauded the collaborative consumption movement and the innovative companies who are driving the way to create new forms of consumption—and hopefully new jobs and economic viability.  History shows recessions typically mark the beginning of 30 years of prosperity.  Organizations like MassChallenge welcome entrepreneurs to help define what the next 30 years will look like. 

John ended the night by saying, “Let’s make it a great 30 years!”  I believe that we’re entering a new era of consumption and that the next 30 years is going to be more about experience than possession.  As Rachel Botsman says, “it's time to make sharing cool again.”

The cover of this week's TIME Magazine caught my attention: "Rethinking Homeownership: Why owning a home may no longer make economic sense."  The article highlights the changing face of the American Dream and how that white pickett fence might not offer the same opportunities it once did.  Although the housing market will eventually recover, experts speculate ownership will never yield the same rewards enjoyed in the second half of the 20th century.  Times are changing.  As ownership loses its luster, renting is gaining in popularity -- a trend that's showing up beyond the housing market.

Since renting is my world at Rentcycle, I'm obviously biased.  But I continue to be amazed by this trend toward renting and the variety of rental opportunities.  In previous blogs, I've covered everything from designer dresses to goats to Christmas Trees.  But the movement is bigger than these things.  As technology brings our lives online and makes experiences digital, the line of ownership becomes blurry and renting becomes a lot more commonplace.  It's more about access than ownership.

I stumbled upon a great site called The Technium by Kevin Kelly, co-Founder of WIRED Magazine and author of the best-selling book, New Rules for the New Economy.  Kevin also has a new book set for release next month called, What Technology Wants.  In a phenomenal post called "Better Than Owning", Kevin Kelly eloquently articulates the rental opportunity as something we're already participating in, whether we realize it or not:

Sharing is not very different from renting. We could say that the sharing economy currently emerging from social media is really a renting economy. But we don't use the word "rent" logically. When we watch a movie on a pay-TV channel we are actually renting it, although we don't use that word. Yet in fact we use a movie (movies are used by watching them) without owning it; instead we pay for the right to borrow it. That is rent. It doesn't feel like rent because there is no visible unit to swap. If we view a Netflix movie it feels more like renting because a little plastic disk is mailed to us. But if Netflix were to suddenly switch to digital download of the movie (as they are doing) we will still be renting the movie without the disk.  The main reason we don't ordinarily use the metaphor of "rent" with digital goods is because we associate renting with things, rather than services. We rent a tuxedo, but we don't rent internet service. But when we rent, we are sharing the cost of ownership across a group. The legal ownership may reside with the company renting, but the effective ownership – the ownership of use – is held by the group borrowing the good or service.

As creations become more digital, they tend to become shared, ownerless goods.  Think about what's happening with digital music, movies, books.  Property is less about title and more about usage.  Last week, I proposed "usership is the new ownership."  After thinking about it some more, I'm realizing this concept of usership is already engrained into our daily lives.  From the roads we drive to the media we consume, shared access is a way of life.  Much of society has subconsciously made this lifestyle shift, but still fail to mentally acknowledge the reality.  Though more apt for poets, I think the saying still rings true: "You might be a renter and not even know it." 

Do you consider yourself part of this new rental economy?

Remember when music was a physical product?  From records to LPs to cassettes, music used to be a tangible good sold in stores like Tower Records and Sam Goody.  Think back to those (now vintage) CD cases and media storage racks filled with hundreds of albums -- a physical testament to a devotion to music.  Fast-forward to today and things are a bit different.  For one, music is largely a digital experience with audio files downloaded onto various devices.  Although music ownership still exists, there's another trend where music is less a possession and more an experience.  From Pandora to Rhapsody, several emerging services provide listeners access to music on-demand.  Rather than own a finite number of songs on a device, on-demand services allow streaming from a large library of shared digital music.  People pay to use versus pay to own -- an emerging concept that extends far beyond music.

If you keep up with any of the major publications, you may have noticed several articles referencing the changing relationship between wealth and ownership in today's economy.  Due to the recent housing crisis, this Wall Street Journal article explains the misconception of home ownership (home ownership no longer yields the same returns compared to 30 years ago) and re-defines "the new American Dream" as renting instead of buying.  Another hot topic in the press during the past couple weeks has been around collaborative consumption, a movement I referenced in another blog post as "the rapid explosion in traditional sharing, bartering, lending, trading, renting, gifting, and swapping redefined through technology and peer communities."  This phenomenon, which has been covered by TED, The New York Times and WIRED has been spearheaded by two visionaries, Rachel Botsman and Roo Rogers.  This duo recently co-authored a book on the topic called, What's Mine Is Yours: The Rise of Collaborative Consumption which is set for release in just a couple weeks.  Coincidentally, another book called The Mesh: Why The Future of Business Is Sharing focuses on eliminating the burdens of ownership through shared access, and is set to hit bookshelves later this month as well.  Both describe a new way of doing business, citing several players disrupting the notion of ownership in favor of usership.  Previously, I've mentioned Swap.com as the leader in swapping.  Services like AirBnB and CouchSurfing are revolutionizing extra space by allowing people to rent out spare futons, bedrooms, apartments and homes.  ZipCar and fellow MassChallenge finalist, RelayRides, are changing the face of car ownership.  Lisa Gansky's Mesh Directory highlights hundreds of others (including Rentcycle) leading the way, and this video by Rachel Botsman features a few powerful case studies too:

As an evangelist for communal exchange, it's great to see collaborative consumption enjoying its time in the sun with some much-deserved buzz.  But the funny thing is, this is not a new concept.  The notion of paying for access versus ownership has been around for quite some time.  What would you say if I told you there are several age-old institutions built upon a dedication to usership?  These are things you and I use everyday.  Consider some of our public commons that have been enjoyed for centuries without a need to own.  For example, we use roads yet we don't own them.  All citizens are granted access to streets and highways through our payment of local taxes and tolls -- in essence, we pay a subscription fee to use the roads.  Similarly, we can borrow books from the library.  Library books grant accss to information on-demand, where content is shared among a community of users.  

The Internet takes this concept to a whole new level, opening doors to all sorts of shared content.  There's a high probability that in the not-too-distant-future, we will not "own" any music, books, movies, etc.  The truth is this is already possible (as I referenced with the music example earlier), but the principle is only just getting its bearings.  Soon, instant access to all these media through subscriptions and on-demand services will become mainstream... without having to own anything.  Chances are you're already doing this through Netflix's instant streaming capability.  You might be surprised that this is the same premise behind cloud computing where servers aren't owned, but shared through a pay-per-use model.  The same principle applies to software as a service (SaaS) where licenses are not owned, but accessed on a subscription basis.  Shared access is all around us.

This pay-per-use model is at the core of renting.  You pay to use things only when you need them.  You can stop paying at any time, at which point, you return the good until you need it again.  This is what renting is all about -- reducing the complexities of ownership through usership.  This is also at the heart of communal exchange.  Collaborative consumption and mesh businesses are not necessarily new, but rather, part of a larger trend of shared access where people pay for use instead of ownership.  Rentcycle is leading the way for collaborative consumption and is proud represent the rental opportunity by making the process easy for the mainstream.  We strongly believe that this ideal of shared access is here to stay.

The best part is: this is only the beginning.