Sharing in the Outdoors — lessons learned from a failed sharing economy startup.
James: “You want to start a company?”
Me: “Yeah let’s do it.”
This is how GearCommons, a peer to peer outdoor gear sharing community started back in 2013. I had just paid off my student loans as a host on Airbnb and was coming off the high of running a snowshoe marathon in Vermont with my good friend James. Somewhere in the stupor of that race, a lightbulb went off above our heads: Sharing + Outdoors = Profit. The housing, transportation, and service markets were loaded with sharing economy companies like Airbnb, Uber, and Taskrabbit and they were exploding with valuations in the billions.
However, no one had yet touched the outdoor recreation space which sees over $600B in consumer spending each year. Why not? This is more than what Americans spend on vehicles, pharmaceuticals and hotels. It turns out that people like to have fun outside and they’re willing to spend good money on it.
Have I convinced you yet that we should start a sharing economy business in the outdoor industry?
As two outdoorsy engineers from Maine who came of age in the burgeoning Sharing Economy, it was our turn to apply this model to a new industry. And that’s what we spent the next 2.5 years trying to do…
Events, Press and Horrifying Traction
Ok, we launched our startup: GearCommons.com — a peer-to-peer platform for renting outdoor equipment. Great idea, now let’s find users and demonstrate some impressive traction.
For the first six months we ran local events in Boston, partnering with climbing gyms, college outing clubs, and hosting our own events. We drank beer, climbed rocks, went on hikes, and everyone loved the concept of our business. It was awesome. However, chasing down partnerships and organizing events was tremendously time intensive and it led to almost ZERO new signups and even fewer gear rental transactions.
Ok, so organizing events are a terrible way to gain traction, let’s try something else. Let’s get noticed in the press.
Having run crowdfunding campaigns in the past, we knew that press could be a quick way to gain some hard-hitting exposure and traction. So we spent the next few months focusing on making some noise in the outdoor and startup press scene. This effort yielded articles by Sports Illustrated, Outside Magazine, Delta Sky Magazine (in the back of your plane seat), BostInno (four times), and 20 other extremely relevant publications over the next few months. We also managed to score a five-minute exclusive interview on Channel 5 Boston that aired at primetime. Our interview was flanked by similar videos about Zipcar and Airbnb, so we were riding high sitting next to our hyper-successful Sharing Economy predecessors.
Looking in from the outside, this would have been seen as a huge success. We wanted to get press and it came in droves. However, on the metrics that really mattered (signups and rental bookings) it was nothing more than noise to our already pretty weak signal. It led to a few hundred more site visits than our daily average, a few dozen signups, and maybe a couple of weekend rentals. Ultimately, all signs pointed to another unsuccessful attempt gain traction.
Need. To. Try. Something. Else.
Mental Models (and a new business model)
After a year of chasing the peer-to-peer bet, we had an interesting business but it still had a laughable amount of traction. Something that our would-be investors never failed to point out. The longer we went down this path, the worse our prospects were for raising money to take our business to the next level.
Time for a pivot.
After a weekend of soul-searching in the mountains, we came to realize that we had created an experience that was simply too far from people’s existing behaviors (read: mental models) in order for it to really take off. In an attempt to bring us closer to industry and outdoor consumer norms, we started approaching outdoor gear shops. They have expertise, they have inventory, and consumers that are already used to renting skis, snowboards and camping equipment from them. This infrastructure all exists today, except the ability to do it on the web. As a customer, you have to call the shop, give your credit card over the phone, or show up day-of hoping that they have what you need in stock. This begged the question, “If you can book everything else in the world online, why not outdoor gear rentals?”
Point of sale rental software meets a distributed consumer tech platform? Perfect, let’s do it.
Moving on from the peer-to-peer business model, we largely copied OpenTable’s model by allowing outdoor gear rental shops to post their gear on our website while also being able to embed our rental flow onto their own websites as well. After 3 months of building an MVP we shopped it around to hundreds of gear shops.
Zero traction. Not even a little bit.
Eventually, reality set in and we realized that Americans just don’t rent outdoor gear that often. Therefore most shops tend not to focus on rental as a priority. Most gear shops (self reported to us), said that their revenue from rental was less than 1% of their revenue from general retail sales. They were much more interested in selling a new Patagonia puffy vest for $200 than they were in spending the time and energy necessary to run a rental program with weak returns.
After visiting a dozen shops who were using pencil and paper to manage their expenses, inventory, and rentals, we really thought we were onto something. The sophisticated shops used Google Docs. We thought it would be a lay-up to walk into a shop and say, “Voila, here is the internet, we can use it to help grow your business.” Contrary to our tech-savvy, millennial sensibilities, it seemed that the both large and small shops in the industry were quite averse to using technology as a means to do business. Among other things, we could offer them a secure online platform, access to urban consumers, and it was even free to get started.
Technology left a bad taste in the mouths of almost everyone we spoke to. Even if it meant growing their potential consumer base, improving their operating efficiency and ultimately making more money, they weren’t interested.
Dead end. Six months lost. Try something else.
Desperation, Crowdfunding and Earthquakes
Road-weary from 2+ years of the startup hustle, we were hungry for money and desperate for SOME signal in the market. So we decided to try something wacky. Setting our web platform almost entirely to the side, we knew 2 things:
1.) The Sharing Economy was exploding in the housing, transportation, and services sectors.
2.) Outdoor consumers spend a fortune on gear.
There had to be some way that we could combine these worlds and provide some value at their intersection. So as a last-ditch effort to keep the ship moving, we set off to tell a slightly different sort of story. We wanted to show people that you can use a variety of Sharing Economy services to help you get outside. For any good adventure, you need a set of wheels, a place to crash and of course you need to gear. So we set off to create an outdoor adventure film as inspired by the Sharing Economy.
Our goals were three-fold:
1.) Keep us going financially for a few more months
2.) Broaden our thinking about sharing in the outdoors beyond just peer-to-peer outdoor gear rentals
3.) Hit the film festival circuit and make noise about sharing in the outdoors.
We partnered with an award-winning team of adventure filmmakers who were psyched to help tell this story. The Sharing Economy was a hot topic and the outdoor industry was in need of some fresh new ideas. They were game immediately.
So we developed our rewards, filmed our video and prepped our media blitz for the launch of the campaign. Having run a few of these campaigns before, things were running like clockwork… until we went to launch the campaign.
The same week that we launched our campaign there was a 7.8 magnitude earthquake that hit Nepal. It was tragic for the people of Nepal and it was all too close to home for the outdoor community who had lost many of their own. Almost immediately, all outdoor media seemed to focus on the coverage of this disaster and we watched our campaign fade quietly into the night. Rightfully so. One outdoor journalist told us quite bluntly over the phone, “You’ve got to be shitting me that you’re trying to do this right now given what just happened.” He was right. Also, during that week, over 150 crowdfunding campaigns launched on Indiegogo to provide relief to the people of Nepal, further burying our little adventure film. Again, rightfully so. In the second week of our campaign, another earthquake hit Nepal (7.3 magnitude this time). At this point, we folded our campaign and told everyone to send their thoughts, money, and prayers to the people of Nepal.
We were out of money. We were out of time. We had evenrun our health, our relationships, and our sanity into the ground. It was time to come up for air, figure out what we’ve learned, and move on.
After cutting our teeth for 2.5 years in the startup world, we came away with some strong lessons. They may all sound very obvious but having lived through them, it brings on a whole new sense of meaning.
- Solve the #1 Problem not the #2 Problem
In the very beginning of our research about the outdoor space, we read an industry report about outdoor participation. It talked about what activities were growing, shrinking, and emerging. It also talked about why people say they don’t get outside more:
- Problem #1 — people said they don’t have enough time to get outside. At the time, we felt that this was actually pretty tough to solve for. Time is a very personal and ephemeral thing and so we decided to not solve this problem.
- Problem #2 — people said they don’t have access to the right equipment. Bingo!!! Sharing Economy to the rescue. Under today’s current model in the outdoor industry, if you don’t own a kayak, you don’t typically go kayaking. Ownership is a barrier to participation, end of story. We knew that the sharing economy model could solve this problem very tangibly so that’s what we did.
Very quickly we amassed over $1M of outdoor gear in Boston, posted onto the site by new members who were stoked about sharing their equipment with strangers. Supply was high but demand was low (very low).
After a series of rentals (and many months of time and experience) we came to realize that by focusing on the #2 problem (access to equipment) we actually exacerbated the #1 problem (lack of time). The two-sided market place model was high friction and required large amounts of time from both sides; renter and owner (request, approval, emails, texts, pickup, return, etc). A typical transaction was about $30 and took a tremendous amount of effort on both the part of the renter and the owner. For the renter, they saved some money but not a lot. For the owner, they made $30, not a very inspiring sum of money.
Ultimately, we focused on a problem that we already had a solution for. Big mistake.
Solve the #1 problem, not the #2.
2.) Don’t force a flawed business model
Access to equipment was indeed a real problem that people had. We designed our service to solve that problem and it worked. However, we didn’t realize at the time but we had just built a business that only makes money one day a week and one day a year.
Let me explain.
The urban outdoor enthusiast (our target) usually only goes outside on the weekends. This means that they spend Mon/Tues/Wed coordinating trips with friends for the upcoming weekend. By Thursday, they realize they need gear, they’ve heard of us, and they perform a transaction on GearCommons. So we found that we only made money one day a week… on Thursdays.
Additionally, people who rent gear typically only do so once or twice a year. This means our customer really only needed us (and would give us money) 1–2 times per year. In the 2.5 years we were in business we only had a handful of repeat customers. That’s a problem if you’re trying to make money and keep your business alive.
At one point we were doing a series of investment pitches to VC’s in Boston, New York and San Francisco. One VC in particular nailed it on the head after we described our typical user’s flow through our model.
Investor: “So, you’re telling us that you only make money one day a week and that your customer only needs you one time a year?”
Me: “Ummm yeah I guess that’s true.”
Investor: “You have a flawed business model, come back to me when you’ve got it sorted out.”
We left that meeting feeling misunderstood, like we weren’t appreciated in our own time. The reality was that while we were indeed solving a problem, it just wasn’t a big enough problem. A good consumer business model should allow its customers to give them money repeatedly.
We spent early mornings, late nights, and all of our free time trying to push a business model that just wasn’t clicking. Don’t do that.
3.) The perils of the part time startup
Now, I’m about to say something obvious… There’s no such thing as a part time startup.
As founders, we each took time off from our “real jobs” in order to pursue GearCommons. I even cashed out my retirement fund (ouch) to give me time to pursue this opportunity. However, for a variety of reasons (and excuses), our respective founder timelines didn’t line up together. So James and I spent our startup’s lifetime (2.5 years) in various states of “full-time-ness”. Swapping periods of time making money and pinching pennies. Over that period of time, we learned fairly intimately that the time, effort, and focus required to create a new order of things is tremendous. It requires its founders to be all-in. No excuses.
Duh. Consider the lesson learned.
We built our MVP (minimum viable product) for 3 months on nights and weekends and then when GearCommons launched, I left my full time job. Sounds good so far. However, at the time I was also focused on another company, Alpine Hammock, a product that I had crowdfunded the year prior with my friend Ryan. People told me that it was a bad idea to split my focus across two companies.
They were right. Lesson learned.
My cofounder James also had divided focus because of his full time job as a software engineer at a funded startup downtown (that eventually ran out of money and folded). We were told that this was a mistake. It felt like a mistake at the time too. However, at the time we were both unwilling to give up on making good products in order to pursue a potentially great product.
Looking back on it, I think it’s possible (and probably smart) to spend your nights and weekends building your MVP and running small experiments to prove product-market fit. However, once your startup is live, a zen master like Yoda would probably say, “Spending 20 hours a week of mornings, nights, and weekends does not a startup make”. And he would be right.
Once you’ve pressed the “GO button” and your startup is alive, you should be prepared to do whatever it takes. No distractions. No excuses.
After working 2.5 years through the failure of a web-tech startup, I’ve come to realize that talking about failure is not sexy. The only examples of startup news I see are the highlights of companies that acquire 20,000 new users in the first day or that exit for $1B to Facebook, Google or Amazon. No one talks about the companies and founders who have made a solid bet, laid it all on the line and still failed. It’s like only watching the top 10 on ESPN and not ever rooting for the team that despite their best efforts still lost the game.
We learned a lot and came away with some scars that will only make our next company that much more successful. One day James and I grabbed beers after a long day:
James: “Do you think it’s time to fold the company?”
Me: “Yeah, I think it’s time.”
Thanks to everyone who shared the outdoors for the past few years. We massively appreciate all the help, encouragement and stoke that our friends, family, and the GearCommons community provided along the way.
Share gear. Get outside.