Local tech startup steps on the gas
Sarah Grant always loved the open road but was never too high on staying in hotels, so the idea of purchasing an RV had obvious appeal
“If you can’t travel the world, you should at least have a good grasp of the lower 48,” said Grant, whose family typically travels each year by car from their home in Fostoria, Ohio, to Texas.
However, the prospect of a piece of equipment costing $50,000 or more sitting in her driveway for 10 or 11 months a year wasn’t ideal. That was until RVShare, a local startup, helped turned her apartment-on-wheels — a 2010 Fleetwood Quest, to be exact — into a revenue generator for her family. So far this vacation season, “The Quest,” as the family calls it, only sits in their driveway for two or three-day stretches at a time and the earned revenue more than covers the debt service on their RV.
Akron-based RVShare is an AirBnB-like platform that allows RV owners to rent out their vehicles when they aren’t using them. For making the connection and providing some of the back-end work — insurance, most importantly — RVShare takes a cut of the rental fee, which usually starts at about 15%.
“Our mission statement is not on our website because it wouldn’t make sense to the front-end consumer,” said RVShare co-founder and CEO Joel Clark. “We create entrepreneurs. We fell in love early on with helping the middle-American family.”
Admittedly, Clark said, the RV rental business seems like an odd niche, but there was clearly a market need. For one, people had been pedaling RV rentals on Craigslist for years, lacking access to much of the back-end technology that he believes makes RVShare so valuable. Also, many RV dealerships or mom-and-pop shops who rent vehicles only do so during certain times of the year.
The impetus for the company was RVShare co-founder Mark Jenney, who had bought an RV to travel the country as part of his honeymoon. Afterward, he realized he had no use for the vehicle and longed for a way to make money off the investment. Enter Clark, who offered to build a rudimentary template. It immediately started getting hits.
“The average RV sits unused for 50 weeks a year,” Clark said. “When insurance companies rate the risk, they’re rating the risk on only two usage weeks per year. That’s crazy. You’ve got 10 million families for 50 weeks a year that pretty much have a money pit in the driveway they don’t have time to use. It’s almost a second mortgage.”
And so far, the business model seems to be working. Without providing exact figures, Clark said the 4-year-old startup remains self-funded and “fully profitable.” Also, at this point last year, RVShare had about 12 employees, but today its workforce hovers around 40 people. Right now, more than 30,000 RVs are listed for rent on the company’s website. According to the company, the average RV owner earns more than $10,000 per year through the service. Some reported earning $30,000. Listings also are free.
“Our greatest challenge is finding the right people to add to our team fast enough,” Clark said. “We’re very much a puppy growing into its paws.”
The so-called “sharing economy” is hardly a novel concept — just look at the success of companies like Lyft, Uber and AirBnB. The idea behind it being sharing underused assets or services, usually for a fee, on a peer-to-peer basis.
However, the model, especially for a startup, does present its challenges, Clark said. For one, Clark said RVShare’s first two years were spent trying to develop the marketplace.
“Building a platform doesn’t necessarily mean users would immediately flock to it,” he said.
“Marketplaces are a simple idea, but they also present some very unique problems,” Clark said. “Starting a marketplace from scratch is a chicken-and-egg problem. You’re responsible for one side of the equation or the other. Neither side wants to be first side to the party. We ended up cracking that egg and built this product, and then went out and found people trying to do this but didn’t have a platform.”
RVShare does have its competitors, though Clark said RVShare’s differentiator is that it’s the only marketplace with both liability and comp insurance backed by a rated carrier. Others, he said, self-insure damage and collision. RVShare has an exclusive arrangement with MBA Insurance, which specializes in the RV space.
The sharing economy, meanwhile, is becoming an increasingly larger piece of the overall economy. According to a survey from the Pew Research Center, 72% of American adults have used at least one of 11 different shared and on-demand services mentioned in the survey.
Also, about one in five Americans have used four or more of these services, and 7% have used six or more. Moreover, according to a recent report from the Federal Reserve Bank of Kansas City, current economic data might not yet fully grasp the impact peer-to-peer services, particularly ride-sharing apps, are having on the overall economy.
Published at Sat, 12 Aug 2017 04:01:00 +0000