Communal Culture Spawns Rental Startups in Construction, Healthcare

Xconomy Boston — 

How does today’s “sharing economy” look to a guy who grew up in a commune in Missouri, without any technology like phones or computers?

It looks familiar—and also like good business. Willy Schlacks was raised in a community that he calls a “mix of theocracy and communism.” He was 27 when he and his brother, Jabbok, left the commune with their families. He remembers the date: August 23, 2010. “We call it D-Day,” Schlacks says.

The brothers are now co-founders of a tech startup called EquipmentShare. The Missouri-based company just raised a $2 million seed financing round led by Boston-area venture firm Romulus Capital, with Ashton Kutcher, Krillion Ventures, and others participating. EquipmentShare helps contractors borrow and share construction equipment online, and it’s emblematic of the sharing economy moving into different industries—but more on that in a minute.

The Schlacks brothers grew up with electricity and the grid (they’re not Amish), but things like the Internet and business were shunned. As teens, they got their hands on a 486-based PC and learned how to program it. They even started a computer business, but it was “very brief—it got shut down by the elders,” Schlacks says. “We’ve always been hustlers. We had zero education in that area, it’s all self taught.”

They also knew how to build stuff, so after leaving the commune they started a series of construction businesses to support themselves. They were doing fine, but kept running into the same problem: renting or buying equipment for construction jobs is expensive and cumbersome. If you need a crane or forklift for a couple days longer than you planned, you end up paying huge fees, and you might as well have just bought the thing.

So the Schlacks set up an informal equipment-sharing system with their contractor friends and peers. Then they realized that could be a good business by itself, making use of online technologies. They heard about Y Combinator, the Bay Area startup accelerator, and snuck in their application just minutes before the deadline last fall. “We didn’t expect to get in,” Schlacks admits.

But get in they did, after flying to San Francisco (their first time to the city) for the interview process. The YC mentorship program was extremely helpful, Schlacks says. One key lesson was that their initial idea of how customers would use the site didn’t work out. “It had to be more convenient, with better service and better prices,” he says. Contractors are not early-adopter, techie types, he adds. “They’ll use a new platform if it helps them. That’s been our mantra—this has to help contractors.”

EquipmentShare rolled out its service in February. Once contractors sign up and get background checks, they can do things like rent equipment in the field just by texting or calling from their cellphone, Schlacks says. Next up for the company is expanding its service from the Midwest to construction growth markets in Texas and California. It’s very early, of course, but the startup has figured out the nuances of renting out a wide range of equipment such as cranes, forklifts, bulldozers, and skid loaders—and how to make money doing it.

Perhaps what’s most interesting is how the Schlacks worldview, coming from a communal society where they never owned any property, fits with the digital sharing economy of Uber, Airbnb, and the like.

“The sharing economy was nothing new to us,” Schlacks says. “We know what it’s like if people don’t have personal property and they’re sharing everything. We’re naturally looking towards the more communal aspect of things. What’s mine is yours—that’s our default setting,” he says. “But I appreciate capitalism—I definitely prefer it.”

And so do investors, of course. EquipmentShare’s lead VC, Romulus Capital, has built an early thesis around peer-to-peer sharing—or “collaborative consumption”—for businesses. The fastest-growing company in the firm’s portfolio is Cohealo, a Boston-area software startup that helps hospitals and clinics share medical equipment such as scopes and surgical tables. (Cohealo’s CEO, Mark Slaughter, helped introduce Romulus to EquipmentShare.)

Medicine and construction have some key things in common, says Romulus co-founder Neil Chheda. They both involve “expensive, low-utilization [equipment] for special users.” And the mechanics of sharing online can be pretty similar across fields. “You search for the type of equipment you need, enter your schedule, find it, read reviews, and book it,” he says.

One difference has to do with revenue generation for customers. For Cohealo, the sharing occurs within a network of hospitals with the same owner, so the payoff for customers is in cost savings, not new revenues. For EquipmentShare, customers can also make money by renting out their property.

Romulus has invested in other, related companies whose products ultimately touch consumers. These include Beacon, a commuter-plane service, and ClassPass, which runs a membership program for unlimited fitness classes across gyms.

For any of these companies, getting to critical mass is a challenge. For business-to-business sharing, in particular, a company has to provide big savings—and become well-known enough to build up equipment inventory and a user community, which feed each other. “The hard part is driving the network effect,” Chheda says. “Can you kick-start it enough at the beginning to get it going?”

EquipmentShare has its work cut out for it. Other construction and equipment-marketplace startups include Getable, TuffWerx, and Crocodo. But Schlacks doesn’t seem too concerned about the competitive landscape, even with his somewhat limited exposure to how the tech industry works.

“What’s interesting is how similar people are in any environment,” he says. “Human nature is so ingrained into all of us. No matter what the culture, there are so many similarities.”

To build anything successful, Schlacks says, “a lot does come down to hard work. You really need a work ethic to get anything done, no matter what scene you’re in. You have a great idea, and then there are valleys after that. You have to push through those and keep testing it, believing it, working at it. So many people don’t push past the low point.”