Tim Hyer is the founder of Rentcycle, a startup based in San Francisco. Rentcycle helps local rental businesses get discovered and lets consumers compare options and book reservations online. The mission is to waste less, share more.
Cleantech has been called the greatest environmental opportunity of the 21st century—a potential counter-reality to the inconvenient truth of pollution, destruction and global climate change. In a previous post, I touted the ecological benefits of renting. Now I want to talk about the technology sitting at the center of the cleantech universe—solar power. The opportunity to create energy out of a renewable resource as prevalent as sunlight is very promising. It’s also very expensive.
The average cost to manufacture and install a residential solar system is $40,000. Sure, homeowners recoup this investment and more with reduced energy bills, effective immediately. But it’s still a ton of cash to put down up-front. The recession didn’t help a widespread adoption of solar technology. It’s estimated more than $12B in revenues were lost in the solar industry during 2009 alone. What a shame. This green, cost-cutting technology was falling victim to frozen credit, fewer subsidies and massive layoffs. Just like the rest of the economy.So, what’s a solar company to do? All this expensive product with no way to sell it. A few innovative companies realized maybe that was at the heart of the problem—selling. They thought, perhaps there are other (less financially prohibitive) ways to distribute solar technology. Instead of a one-time transaction of $40,000, some solar companies began leasing their systems on long-term contracts.
One of these solar rental pioneers is San Francisco-based SunRun. Under their model, households pay an installation fee (no more than $1K) and agree to a fixed monthly utility and maintenance bill for the next 20 years, during which time they save thousands of dollars. Leases are easily transferred so relocation isn’t a problem. Most new homeowners are happy to lock in electricity costs for the near-term future—a financial no-brainer.Compared with the rest of the industry which tanked in 2009, SunRun’s year-over-year growth was 400% and bookings are expected to triple in 2010. And SunRun isn’t the only solar company to discover the rental opportunity—Sungevity, Citizenre REnU, SolarCity and others are discovering the consumer-friendly benefits of renting.Solar energy. Just another way to reduce, reuse, rent.
Whether we like it or not, we’re all familiar with insurance giant, GEICO and its memorable advertising icons. From the witty gecko to the googly-eyed stack of money, GEICO’s got a way of getting their messages to stick in our minds. Such was the case with their popular caveman campaign. The slogan, “So easy, even a caveman can do it,” led to several hilarious commercials, billboards and even a primetime television show (for part of a season)! Playing off the concept of simple-minded cavemen, GEICO successfully communicated how easy it is to use their product. Clear and concise.
Thanks to vator.tv, Rentcycle recently had the opportunity to produce a video as part of a prize won at the recent Vator Splash startup competition. In collaboration with video production company, StudioNow, Rentcycle created a short animation to highlight the benefits of renting. The funny thing about renting is, despite its clear benefits to save money, space and the environment, few consumers consider it an option. This is partly because there currently is no convenient online solution (we’re working on this ☺) and partly becase few realize just how many things can be rented at a fraction of the cost of buying (literally just about anything you can think of). For this reason, we wanted to create a simple but entertaining piece introducing consumers to the rental opportunity.We needed to tell the story in an easily understandable way so our startup’s new solution could be grasped in about a minute’s time. Like GEICO, we decided on the caveman analogy, not only because it implies simplicity, but also because it references renting’s long history. Whether a pistol in the Wild West, a wig in Elizabethian England or a club in prehistoric times, renting has been around for centuries. Only recently has the trend made a comeback—which is the purpose of this animation. I have to give the creative credit to StudioNow for bringing it all to life. Go ahead and take a look—hopefully it’s as memorable as a GEICO commercial!Special thanks to vator.tv and StudioNow for the hard work and collaboration making this video possible. It was a fun, creative collaboration. Cheers!
For those who have followed my startup journey, change is something I've had to become comfortable with. Change of lifestyle. Change of career. Even a change in wardrobe (mostly PJ's now). And I definitely don't sleep as much as I used to! It's a fun ride. An evolution. Well, today marks another change, and an exciting one at that.
About an hour ago, we launched Rentcycle 2.0. The Rentcycle website has metamorphosized from a business-facing SaaS application to a consumer-facing rental marketplace. Don't worry -- our current business customers will still be able to use our back-end software and book reservations from their websites -- it's just now we have something useful to offer consumers as well. As of today, there's now a place where you can discover, compare and book items for rent online! As far as we know, Rentcycle is the only company that is exclusively serving the rental industry in this way. There are other sites that promote peer-to-peer renting (like if I wanted to rent out the ladder in my closet for some extra cash), but Rentcycle is all about helping the rental businesses who yearn to get discovered.
As we start a brand new year, one can only hope we've seen the worst of the recession. Although predictions for the economy are optimistic, the aftermath of last year's layoffs have sent much of the workforce back to school. Classrooms are crowded and budgets are tighter than ever. Today's student needs to learn on a dime. On top of the cost of tuition, supplies, transportation, room and board, textbooks are one of the overlooked expenses students are forced to burden in order to get a quality education. Students spend an average of $900 per year on textbooks which is 20% of tuition costs at an average university. There's even an entire campaign dedicated to making textbooks more affordable. For years, buying and selling used books was an option, but now there's another solution.
Once again, renting comes to the rescue! Over the past couple years, several startups have emerged to alleviate student wallets by applying the successful Netflix model to textbooks. A recent USA Today article featured Santa Clara-based Chegg.com, a leader in the growing space of college textbook rentals. Although they are yet to turn a profit, Chegg has raised $25M in venture funding and already has hundreds of thousands of customers on more than 4,000 campuses. Through the simple idea of renting textbooks, Chegg saves its customers 50 - 70% the cost of buying books new. That's a lot of money to a cash-strapped college student!
But Chegg isn't the only one. Similar startups like eCampus.com, BookRenter.com, CollegeBookRenter.com and CampusBookRentals.com attempt to solve the same problem. Even traditional university bookstores are jumping on the bandwagon to capture a piece of the pie and give progressive students what they're now asking for. My wife, a PhD student at UC-Berkeley tells me the local bookstore, Ned's Books (which has multiple locations across the country) is now promoting textbook rentals on their homepage and in their store. I have a feeling this isn't a fad.
It's often the simplest ideas that have the biggest impact. Rent things, save money. There's your economics lesson for the week.
Anyone who has spent more than 30 seconds browsing YouTube understands the power video has as a persuasive communications medium. Viral videos can turn ordinary people into television stars overnight (the now famous JK wedding entrance dance clip was recently spoofed on The Office). And catchy consumer skits can make or break a brand (like the amateur music video United Breaks Guitars). Video has the ability to appeal to multiple senses and can make complex points quickly. Which is why, when you come across a good one, you can't help but pass it along. But with the millions of amateur film makers out there, good quality isn't so easy to find. Standing out from the clutter requires a certain level of polish and content that can hold a viewer's attention.
It's no different in the business world, where film is becoming more and more of a requirement -- especially for those just entering the marketplace. Today's consumers are strapped for time and are easily bored by text heavy marketing collateral. If you can't make your point in 60 seconds or less, you may be losing potential customers. Having visual pitches, promos and demos are a must. Unfortunately, well-produced films can cost upwards of $1,000 for a 60 second clip. To a startup, that's a lot of cash!Luckily, I was recently referred to a great resource for getting professional video production services on a startup budget. A company called TurnHere runs a special offer for small businesses and startups where you can get a 60 second video filmed, edited and produced for free. That's right, FREE! You then have 6 months to use this piece to promote your company in any way you'd like. After which time, you decide whether you'd like to purchase or stop using the video. This try-before-you-buy approach is perfect for startups trying to get off the ground and is a smart move on the part of the video production company since it gets new customers (like me) to consider professional video production without the up-front cost. Check out the promo they helped me put together for Rentcycle:I had an excellent experience working with TurnHere and highly recommend them to other startups. Their professional staff has an eye for telling powerful stories in a short amount of time. Their turn around time is super fast -- it only took four days from filming to final delivery. And obviously, the price is right. I'm looking forward to maximizing this promo to get the word out about Rentcycle. I'm confident this video will help me bring in enough additional revenue in 6 months time that the film will pay for itself.See you on YouTube!
As the founder of a new rental startup, I've always been a fan of the Netflix model. I loved watching this company shake things up after years of complacency in the movie rental industry. I enjoyed the David and Goliath style competition that developed between nimble Netflix and monstrous Blockbuster. And I continue to be impressed by the innovations Netflix continues to push out. Maybe it has something to do with their unique corporate culture -- if you wanna peek, check out this fantastic Netflix culture presentation. Clearly, I'm an admirer. Which is why I was pleased to see a new startup applying this same simple model -- mail-order renting -- to another sector.
A new website, Rent the Runway (RTR) mixes Netflix with high fashion. Check out this great feature from last week's New York Times. Geared toward trend-conscious women on a budget, RTR offers dresses from A-list designers at a fraction of the cost. Rather than blowing an entire paycheck for one night out on the town, RTR provides options for single-use stylings that don't break the bank. Rentals run between $50 and $200 for four days of use. The concept is simple: find a dress you love, schedule delivery, wear it, drop it back in the mail. They even take care of the dry cleaning for you! The founders, who just finished the testing phase on Monday, were particularly smart with the roll-out of their product -- making it invitation-only, creating a sense of exclusivity and attracting 20,000 women to the wait-list. Very clever and perfect for the gotta-have-it mentality of the fashion world. I didn't expect any less from two HBS grads.
Like any startup, RTR has its share of challenges -- quickly changing styles, divergent tastes, covering costs for each dress, delivery fiascoes, sizing and fitting issues -- but I believe they've got something here. Reminds me of a couple other luxury rental companies I'm also a fan of, Avelle (formerly BagBorroworSteal) and BorrowedBling. The economics of renting make so much sense, and I think companies like these are opening up opportunities for the everyday person to enjoy the finer things in life. Kudos.
Now that Rentcycle has a blog, a few people have asked about my path. How did I get here? Here's the scoop.
My journey with Rentcycle officially started in November 2008, but you can argue it really started when I moved cross-country from North Carolina to California in July 2007. While my wife started a PhD program at Berkeley, I got a full-time job at an innovation consulting firm in Silicon Valley, called Cheskin. Helping some of the most powerful Fortune 500 companies develop new products and services, I couldn't help but feel the potential of my new home in the Bay Area. I was surrounded by innovation, by invention, and it didn't take long for me to catch the startup bug. With every client I engaged with, with every article I read in the local tech blogs, I felt strong urges to get out there and start something on my own. And it could have been anything -- as long as it solved a need and could make an impact.
I recall this one day when I engaged with the Idea Mentor at Adobe, Rick Bess. Rick came into Cheskin and talked about the innovation process at Adobe and how it's embedded within the culture. During his presentation, he made a comment about how he's always lived and breathed innovation, from the time he was 26 years old... which was when he started his first company. He went on about 26 year olds being free of the obligations of an older crowd and how it's the ideal age to start a company. I was inspired by these words of encouragement, since I happened to be 26 at the time. It was at that point that I officially had startups on the brain. My travels always sparked different ideas -- a trip to Portland had me thinking of opening a unique bar reminiscent of the great local brew experiences in Oregon. Visits to my nieces and nephews led to internet startup ideas where families could connect and share hand-me-down clothing through an online community. Seemed inspiration was all around, it was just a matter of time.
Finally, I had an opening. In November 2008, I completed a life-long goal by finishing my first Ironman triathlon. To give some context, I had spent the prior six months dedicating approximately 20 hours per week to training (swimming, biking and running). Needless to say, I suddenly had a lot of extra time on my hands! It was at this same time that I was exploring my latest startup fancy, which happened to be related to renting stuff. As a triathlete, I've rented my fair share of equipment -- from bikes, to wetsuits, to zip wheels. And what a pain the whole process had been! I knew there had to be a better way. Hence, the birth of Rentcycle. For the next six months, I wrote and revised several business plans. I learned the ropes on my own as I acquired domain names, applied for trademarks and recruited technical help. I heard of startup incubator programs and applied to a couple. But was discouraged to learn most required that I quit my day job. At this very early stage, and without technical help, I wasn't ready to take the plunge. So, I continued to balance my day job with long nights and busy weekends. I was referred to an article in TechCrunch about a new incubator called The Founder Institute. In May 2009, I became part of the inaugural class. Suddenly, I found myself surrounded by peers who were facing the same challenges and obstacles as me. It was so refreshing and helped establish instant camaraderie. We commiserated about the juggling act, balancing startup with full-time job. We shared experiences as we sought technical talent and helped each other through our first investor pitches. It was a very collaborative and encouraging group. Between smart peers and phenomenal mentors, The Institute introduced me to a whole new world.
Since graduation, I've launched my product, gotten some solid press and have acquired over 100 customers! Exciting doesn't begin to describe this phase of my life. 2010 is going to be a big year for the business and I look forward to what lies ahead!
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