Crains New York - November 19, 2012 - (Page 8)

SMALL BUSINESS No closet space?No problem Startups rent paintings and other items to consumers for whom (owning) less is more A BY MAGGIE OVERFELT lthough it’s possible to buy paintings and other fine art through the site Artsicle, 90% of its customers prefer to rent them. “Life is a little bit different from when my parents grew up,” said Alexis Tryon, 26, who cofounded the Manhattan startup in November 2010 after working in the hospitality industry.“Part of that means owning less stuff.” Artsicle, where rentals start at $25 a month,has annual revenue under $500,000 but is not yet prof- itable. Backed by angel investors, the company is part of a long-brewing movement, dubbed collaborative consumption, that is experiencing a new wave of popularity in New York City, Boston and Silicon Valley. Fueled by consumers who are financially pinched, concerned about the environment and tight on living space, dozens of tech startups have set up online marketplaces where customers who want to buy less stuff can rent, share or swap goods instead. “New businesses that empower people to use what they already own are not only financially advantageous, but also communally and individually empowering,” said Craig Shapiro, founder and CEO of Los Angeles-based Collaborative Fund, which has a growing office in New York and invests in firms capitalizing on the movement. Startups in this niche range from Brooklyn-based SnapGoods, an online community where members can share things like amplifiers and power tools, to Rent the Runway, a 142employee Manhattan firm, founded in 2009, that rents out dresses by designers like Proenza Schouler. “Rent AFFORDABLE ART: At Alexis Tryon’s Artsicle, rentals start at $25 a month. the Runway released the stigma of people borrowing,” said Brittany Haas, founder of Happily Ever BorroWED, a year-old Manhattan company that rents out bridal accessories like veils, generating annual revenue in the “tens of thousands.” Certainly, businesses in this niche face plenty of challenges, like many consumers’ leeriness of sharing things with strangers. And it can be tough to find the right business model. Loosecubes, a startup in Dumbo founded to help companies rent out unused cubicles and offices, in two years saw its user base grow to 25,000 individuals looking for a short-term place to work and about 450 companies around the world that had extra space. Founder Campbell McKellar opted to make memberships free so she could build critical mass, operating mainly on NUMBER OF $9 million in ven- MEETUP GROUPS ture capital that in New York City the two-year-old focused on company raised collaborative consumption early on. “We Source: Meetup wanted the ability to focus on honing the product and member growth before monetizing,” Ms. McKellar said. Though the company saw memberships rise by about 74% since January, and had planned to start charging a subscription rate, it suddenly announced it was closing last week. Allowing customers to rent things they are loath to buy seems to be one route to making money in this space. Little Borrowed Dress, a twoyear-old firm in Manhattan backed by New York angel investor Joanne Wilson, designs, manufactures and rents out silk bridesmaids’ dresses, charging $50 to rent a cocktaillength design for two weeks, while asking $75 for full-length styles. “It’s crazy that you could rent designer handbags, dresses and tuxedos, but not the one thing you don’t really want to own—the bridesmaid’s dress,” said Corie Hardee, a former management consultant who started the four-employee company after realizing that she had worn the four most expensive dresses in her closet only once, as a bridesmaid. Revenue is just under $500,000, and the company is experiencing double-digit growth month-overmonth. Ms. Hardee has dresses reserved for weddings booked well into next year.“As people are getting married at a later age, there’s definitely more of a practical mindset,” she said. “Customers have gotten a lot smarter.” 4 To sign up for Crain’s SMALL BUSINESS newsletter, go to www.crainsnewyork.com/smallbiz. 8 | Crain’s New York Business | November 19, 2012 buck ennis http://www.crystalco.com http://www.crystalco.com http://www.crainsnewyork.com/smallbiz

Table of Contents for the Digital Edition of Crains New York - November 19, 2012

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
SMALL BUSINESS
BUSINESS PEOPLE
OPINION
GREG DAVID
REAL ESTATE DEALS
OWNED COMPANIES
THE LIST
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - November 19, 2012