A few years ago, Rosie Dallas, Chaz Englander and Owen Turner-Major were running an office-sharing business, but one of their main frustrations was the items they were buying were generally being used only once or twice. People in the same building probably owned the same products, but the three were flummoxed as to how they could gain access to the nearby items, whether to rent or to borrow.
They had a lightbulb moment: what if there was a platform that listed items for hire nearby, where they could find anything from props to audio equipment to furniture? This would become Fat Lama, a sort of Airbnb for everything.
Sharing is caring, as the idiom goes, but now you can draw a profit.
The Fat Lama platform connects rentiers with renters to hire things from bricks to drones and audio equipment. It is running in multiple cities across the UK and set to launch in the USA.
A user signs up for the website with their Google or Facebook account and can then instantly browse the marketplace and request an item for rent.
To list an item to lend, the user clicks on the list item tab, names their product, uploads photos, selects a listing category, describes the item, picks a price, and depending on the category, the item might enter a queue or be listed straight away.
The company reassures that it has a customer support team on-hand around the clock for advice about lending the item, and like other sharing economy companies, Fat Lama provides the platform and it is up to the user to declare their (sometimes considerable) earnings. The company takes fifteen percent of the lenders' income.
But to get to this point, the startup had to wrangle with the many complexities of the insurance industry to guarantee that products would be safe for the lenders in the event of damage or loss.
Speaking with Techworld, CEO Chaz Englander explains: "We were trying really to understand the initial steps, the problems we needed to solve – the inherent problems, things like insurance.
"It took us about 12 months to solve the insurance problem. We needed to make sure, for obvious reasons, that every single item on the site was covered – that's a very difficult problem to solve from an insurance perspective because there's so many different risk profiles, so many different variables, different transaction sizes, and so on."
The skills of the three cofounders complemented each other, they found, with CMO Rosie's background in branding and marketing, CTO Owen's computer science background, and CEO Chaz's previous experience in the financial sector.
One of the fundamental things the three realised was that "insurance companies are businesses, and all businesses need to turn a profit," says Englander. "We needed to understand the mechanisms, so in a way we became mini insurance experts and were really studying the metrics, their cost and capital, that sort of thing.
"What we did was built out the verification system and the way we risk profile customers, in such a way that we manage to get the claims ratio down – it's just impeccable now, our insurance premium keeps coming down and down because the site, touch wood, is so secure."
The team worked with global insurance specialists XL Catlin, the biggest syndicate in Lloyd's of London. They applied their own knowledge and insights from XL Catlin to be able to adjust their product to any market in the world, Englander claims: "We did a lot of research on this from day one – everything from the way we constructed our terms of service to the way we constructed insurance has always been with a global and scalable view in mind.
"Our insurance is a global product, and we can launch anywhere in the world tomorrow, and we will fit in the way we have done the legal and regulatory framework so we can launch straight away."
The company is currently undergoing a funding round in the USA in preparation of a launch in San Francisco and New York. Fat Lama took in £150,000 during a seed round just before its UK launch in November last year, and then this year raised a further £1 million in London.
Share and share alike?
At first glance the platform draws a mixed reaction. On the one hand, it offers access to expensive equipment for a fraction of the cost, providing people with items they'd rarely be able to get hold of otherwise.
But does the platform, perhaps, also enforce a rentier economy? Unquestionably part of the already controversial ‘sharing economy' – where a digital middleman typically connects sellers of a service with buyers – the platform arguably atomises landlordism:
Naturally, the more lenders earn, the more equipment they can buy and rent out, and some of the lenders are bringing in thousands in income every month.
Does the company see any potential controversies about the balance of economic power on the platform?
Englander argues that Fat Lama connects people with mutual interests, and really drives home that previously expensive items are made much more accessible. An obvious plus is the try-before-you-buy aspect for technical equipment like audio and film production or drones, and even that it takes the pressure off big-purchase decisions – because some or all of the original outgoing could be made back through lending.
"The nature of the people that are renting, they are going to have common interests," Englander says. "So if someone is renting a set of decks, just by the nature of the transaction, the people meeting have an interest.
"People are meeting people frequently in the same demographic with the same interests, so we're seeing a lot of friendships develop, and it's just something we completely didn't anticipate. That's become really powerful for us, it's showing through in the amount people are coming back and renting and borrowing from the same person.
"The situation is someone will rent from someone three or four weeks in a row, and then suddenly the rent and borrower will switch, someone will have gone out and bought something and they'd be lending it back to that person. It's just an incredible thing to see."
He adds that for organisations like schools and universities, perhaps hosting theatre productions, it is easier to source props by renting through the platform than to buy them outright, especially when both money and storage can be difficulties for education organisations.
What's next for the fledgling Airbnb to rent ‘almost' everything? Englander says that the "bread and butter" for the company is the UK for now, and it has organically launched in more cities outside of London. But there will be a "strategic approach" to launching in more cities.
"We're a marketplace, so we can't just jump into a city and get going, there is an element to making sure there's enough supply," Englander says. "But I think the fact there is the amount of listings there is, throughout the UK – with no marketing or anything like that – [shows] there's a need on both sides of the fence for the product, so it's time for us to start looking at other markets and make them more robust.
"Make no mistake about it, New York is on the horizon, but at the end of the day the UK is our bread and butter, and that's what we want to get down pat."