Business: Open Shed
Website: https://www.openshed.com.au/
Concept: Collaborative consumption model that allows people to list items they don’t need online, allowing others to rent them rather than buy brand new products.
What gave you the idea for the business?
I read a book about collaborative consumption and saw some great websites in the UK and US that embraced this concept.
I realised there was an opportunity to do this in Australia and liked the different aspects of the business, I thought I’d enjoy it.
My partner quit his software development job and I stood back from being a lawyer in March last year to concentrate on the business.
Why do it?
Good question! Both of us have always wanted to launch a business together, to see if we could do it.
We are passionate about entrepreneurship and ideas and this really appealed to us. Plus, we thought we could always go back to our jobs and, with no kids or mortgage, why not make the leap now?
We knew we were a bit ahead of the curve in terms of what the market was doing in Australia, but we focused on safety, private messaging and an eBay-style ratings system, as we knew people would respond well to that.
We started building the site in April last year with the beta launch in October. Although the concept has been around overseas for a little while, we still have trust issues and education to work through. We are in the process of building that trust with customers at the moment.
What’s the business model?
The owner of an item lists it for free on the site. There’s a rental fee of 6% along with the rental price. The Ignition Labs program is helping with us with the model, but that’s the general idea.
The business model provides leeway for such a new idea – it reduces the barrier for owners, as they are paying nothing up front to list anything.
To list or rent something, you have to become a member and give information about yourself. We encourage people to give a bit of background about themselves, whether it’s a blog or eBay account, to demonstrate that you are a real, genuine person.
We are looking at how to best build that profile and trust. Airbnb in the US is a good one to keep an eye on in terms of how they’ve done it.
At the moment, we have around 800 members, mainly in Sydney and Melbourne.
What are the barriers you face?
As with all businesses in the collaborative consumption space, the number one issue is education.
The other thing is finding the best touch points and gaining critical mass. Members need to be in the same area for it to work, which provides a challenge.
We are re-focusing on Sydney and getting certain suburbs and communities together to show it can work and then grow it out.
We can do this within the community via schools and sporting clubs, where there’s already that level of trust and there already is a common place of exchange.
There are also different models we’re looking for, whereby charities will get part of the rental fee. We’re in discussion with a number of charities about that.
What makes you think there’s a market for this?
There’s a definite community for this, both for the hip pocket benefit and the environmental benefit.
We did a survey of members on social media and the number one thing they identified is that they really like the idea of sharing and reducing the amount of stuff they have. They really want to save money, but people really identify with the sustainability message too.
What was the appeal of Ignition Labs?
There are a lot of incubators around but, for us, it was all about the quality of mentors, both in terms of their expertise and their networks.
We hadn’t thought about being in an incubator and had adopted a very lean start-up model but the expertise Ignition Labs has really marked out areas where we didn’t have as much knowledge.
It’s great to have someone who knows the business enough that they can give very detailed help, rather than general support.
What was the pitching process like?
We did a written application and a video and then went to the pitch. There were 17 of the 18 mentors on different tables and we spent 10 minutes with each, along with all the other businesses.
It was pretty full-on as we had to re-set every 10 minutes. We didn’t practise the pitch but I’m glad that we didn’t over prepare because the mentors all asked us different sorts of questions.
I think they saw us as a good team. We’d spent $30,000 building the business when it was just the two of us, which shows good characteristics for investors.
I presume it’s also quite attractive to have a technical co-founder – I was constantly told how lucky we were. I’ve picked up elements of marketing up, so it’s been a good match.
What’s the goal now?
Being part of Ignition Labs has made us question a few things and made us put a line through some of our ideas.
When you have a whole group of people push you in a supportive way, it’s a real pressure cooker environment but it helps you step it up to the next level.
We want to get a pilot up and running in a school and show what we’ve delivered when we go to SXSW in the US.
We want to show that it’s a sustainable business within two years and make a profit after that. We keep personal costs down and do some consulting to bring money in.
It’s a lifestyle decision to start-up as much as a business one. It’s something you have to feel passionate about and enjoy the control you have.
I’d like Open Shed to be a huge household name that people think of before they go out and buy something new. We’re aiming to get 20 transactions a week, which will show it is getting traction and really moving.
To read part two, click here.
