DIY enthusiasts and photography fanatics want to own a drill or a DSLR camera themselves. However, the majority of humanity only needs such things once or twice a year, if at all. The solution: rent instead of buy.
The Munich startup useley took a closer look. The implementation: At the end of 2015, a platform was launched where people can rent products like cameras, drills, or game consoles from others. This gives some people affordable access to products they rarely use, while others earn money with their own products—and everyone saves a lot of resources.
The three founders complement each other well: Lucy (28) studied business administration at LMU and primarily takes care of operations and finances; Pascal (25) studied business informatics at TUM and is developing the platform; and Mark (26) studied business administration at TUM and is responsible for marketing and partnerships. Mark answered our questions.
Mark, how did the business idea for Useley come about?
Not in the shower, as you might imagine, but after a long brainstorming process. We work very closely with the Lean Startup and Customer Development methodology and only decided to implement the idea after various brainstorming sessions and many interviews.
Is your idea really that new?
There are actually several platforms that have attempted to solve the problem with different approaches. However, none have yet gained widespread acceptance. According to a survey by Der Spiegel, 62% of young Germans would use such a platform, but so far fewer than 2% have used one.
That's why we asked over 300 people and found three major barriers that have prevented people from doing so:
- People don’t know what they would borrow,
- they are afraid of damage and
- the handover is simply cumbersome.
Therefore, firstly, we inspire users to participate in certain events – for example, we sell a “FIFA Night with Friends” instead of simply renting out a PlayStation – secondly, we offer insurance for both parties, and thirdly, we have a network of partner shops for convenient product collection and return.
What has been your biggest challenge so far?
Acquiring the first 100 customers. With our concept, we have to change people's entrenched habits, which is always difficult. In the beginning, we did a lot of things manually. For example, we founders drove around Munich ourselves for the first 200 orders, delivering GoPros and fondue sets to customers. In the beginning, uncertainty was also very high, and we often heard that people wouldn't accept the concept.
Were you able to refute that? How is business doing now?
We've completed over 1,200 transactions in our pilot city of Munich so far—one of which was the delivery of a PlayStation with FIFA for FC Bayern Munich—with an average transaction volume of €36, and have grown by over €301,000 per month since January, although growth isn't currently our focus. We continue to systematically validate the key hypotheses of our business model, many of which we've already verified.
What is your insider tip for other startups and founders?
The tip is: There are no secret tips. People are always looking for a special tip on how to achieve their goal with as little effort as possible or to look good. They're always looking for shortcuts. Unlike in school, college, or work, however, tricks don't work when starting a business. Perhaps you can fool your teacher or boss into thinking you're doing a good job by being there in a special way.
There are no tricks to building a business model that works and offers real added value to many customers. You can be extra nice to your customers—and you should! But if the customer doesn't need the product, unfortunately, that won't help either.
You were in the LMU Lab, pitched at the Impact Hub, and are connected to UnternehmerTUM and CDTM – how did you benefit from this?
These are all great institutions from which we have learned a great deal in many areas and without which Useley would not exist. We all met on CDTM where we learned the tools for founding a company and continue to benefit from the incredibly helpful network of successful founders such as Stylight, Freeletics, eGym, etc., consultants and investors.
In the LMU Lab we have received many contacts and valuable tips, in Impact Hub We were able to sharpen our sustainability fund and learned a lot about storytelling and marketing. We owe a huge debt of gratitude to all institutions and are very pleased that the scene in Munich has developed so well in recent years.
And what was the best advice you ever received?
We were fortunate enough to have Airbnb's former product manager as our mentor very early on. The best advice he gave us right from the start: “Do things that don’t scale!”. So, at the beginning, we had to do a lot of things by hand to get the most authentic picture possible of our customers and the model.
That's why we actually processed the very first transactions by hand, without writing a single line of code. We walked through downtown Munich with paper registration forms and personally recruited lenders and borrowers. This way, we learned a tremendous amount and understood the process better than few before us.
Apart from customer and process understanding, what do you think is the decisive factor for sustainable and successful company development?
For us, the most important factor was – and remains – the team.
A good team can build a successful startup even from a rather poor idea, whereas a 'bad' team will often fail even with a good idea. Startups are tough; you often work together 14 hours a day, make difficult decisions, and have to resolve small and large crises every week. If you don't work well together, both personally and professionally, you will fail sooner or later.
Where do you see yourself in five years?
In five years, we want to be an integral part of our customers' lives. Just as it's normal for me to book an Airbnb when I travel today, we want people to simply order a camera for their vacation or a Polaroid for their wedding from useley in the future. We also want to be available throughout Germany and other countries.
We wish you much success in the future and thank you very much for the open discussion.
