There’s a lot of money to be made in the sharing economy at the moment. Businesses helping us to rent out or sell things we aren’t using - space in our cars, spare rooms and even excess food - finally seem to have hit on that magic combination of scale and buzz and venture capitalists are piling in like there’s no tomorrow. Private car hire app Uber is now worth $17bn (£10bn), while room rental site Airbnb has been valued at $10bn.
Those increasingly big names all began life as upstart startups, though, not the brainchild of established brands. But where there’s a lucrative pie to get slicing, it’s not surprising that well-known businesspeople are also piling in.
Step forward Sir Stelios Haji-Ioannou, the man behind that distinctive shade of orange. Best known for shaking up the airline industry with EasyJet, he has turned his attention back to transport with peer-to-peer car rental platform EasyCar Club, a concept he coined with Lastminute.com founder Brent Hoberman.
It’s a reasonably simple concept: owners list their vehicles on the website for drivers to rent out; EasyCar Club provides insurance and breakdown cover with the RAC (AA? Clearly too yellow), vets both sides and takes a 10% cut of the rental fee (after insurance is paid out). But the company makes no bones about its ambitions.
‘Our aim is to be the largest rental fleet in the UK within three years, which would mean that we would be turning over hundreds of millions,’ says Richard Laughton, the chief executive of EasyCar, the traditional car rental parent of EasyCar Club.
‘It’s something that has got a great deal of scope, because there are 30 million cars on the road, and whether its 5% or 15% of people who are prepared to rent their cars out that’s still a very large number,’ he tells MT.
But getting to the top of a market worth more than £2.1bn in 2013, according to researchers Mintel, will require some pretty impressive growth. EasyCar Club currently has ‘in the mid 1,000s of drivers’ and 1,000 vetted vehicles, just over half of which are available to actively rent on the site. Meanwhile, the largest renter, Enterprise, has a 55,000-strong fleet.
Laughton claims they can overtake the big boys, though, as the company isn’t constrained by the costs of buying its own cars (something which distinguishes it from car clubs like City Car Club and Avis-owned Zipcar). Renters make an average of £1,500-£1,800 a year, he says, while some rake in as much as £3,500. Not enough to give up the day job, but enough to ensure EasyCar Club, the first peer-to-peer car renter in the UK, grew five-fold in the four months after its nationwide launch in January, following a year-long trial in London.
In contrast, it seems the original EasyCar hit something of a wall. The company was launched in 2000 with its own vehicles and, when that didn’t work, switched to a brokerage model. But then it went through what Laughton describes as a ‘period of unprofitability’. That prompted Stelios to take the steering wheel for a couple of years, before stepping back again in February last year, when Laughton was brought on board.
Some of EasyCar Club's 'hero' renters. Credit: EasyCar
At the moment, EasyCar brokers ‘high 10s of 1,000s’ in traditional rentals every year, compared to larger renters that arrange millions, Laughton says. Including EasyCar Club, it turned over £1.4m from £10m worth of transactions it facilitated in the year to September 2013, the most recent publicly available results.
Peer-to-peer rental is ‘absolutely’ the growth market for the company, though, and Laughton expects it to make up a ‘substantial majority’ of revenues in a few years time (if he achieves that aim of pulling together the country’s biggest rental fleet). EasyCar Club is also what brought on board venture capitalist firm Profounders, which put in £1.1m in return for a minority stake. Expansion into countries such as France, Germany, Italy and Spain could be on the cards too, Laughton says, if all goes to plan in the UK.
First, though, the company needs to persuade Brits that renting out cars to and from strangers is a good, safe idea. Airbnb has had to contend with squatters and sex parties, but what would a bad crash do for EasyCar Club?
‘We don’t want people to have accidents – fatal or large damage,’ Laughton says (but of course). ‘But… people recognise that accidents do happen on the road… that’s not necessarily the fault of a peer-to-peer marketplace, it’s just the way things go.’
The whole idea of ‘sharing’, be it cars, houses or driveways, is clearly gaining traction - clearly good news for EasyCar Club. ‘It’s great having all those other business around, all encouraging people to do a similar sort of thing, which is to make the most of the assets that they have,’ Laughton says. ‘We wouldn’t want to be banging the drum about the sharing economy by ourselves.’
The former McKinseyite who founded now-defunct wine trading website Uvine and data visualisation company Fractal Edge before becoming an investment advisor, is definitely not pitching EasyCar Club as some sort of hippy, communal ideal, though.
Sharing economy startups Uber, Airbnb, BlaBlaCar and Lyft have raised huge amounts of venture capital recently.
‘By enabling people to defer or completely put off their decision to buy a car we are helping to reduce resource usage. We don’t try and sell the service on that basis, to be honest,’ Laughton says frankly. ‘We’re certainly not selling ourselves as environmental pioneers.’
This straightforward attitude is a world away from many sharing economy entrepreneurs who are positively evangelistic about its potential global benefits. But when companies are being valued at $17bn – a la Uber – it’s clear that for most sharers it’s business as usual.
But, then again, with Stelios’ pulling power and the existing EasyCar infrastructure, Laughton doesn’t need to do quite as much tub-thumping as from-scratch startups. ‘Because it’s something new, there’s an element of, "Should I do this?" in people’s minds when they’re looking at it and I think the fact that we’ve got the backing of a big brand makes it an easier decision,’ he admits.
The various companies within Stelios’ EasyGroup, which is both the brand licensor (gets paid for the use of that orange) and majority shareholder of EasyCar, do have to contend with the rather long tangerine shadow cast by FTSE 100 low-cost airline EasyJet. None of the other Easy companies have come anywhere near its success. EasyHotel, for example, recently listed on London’s AIM market, but the £30m it raised was half what it originally said it wanted to (although its share price has risen from 80p to 97p since floating at the end of June).
Laughton eventually agrees when I point out EasyJet is a hard act to follow, but insists, ‘It also means there is a great deal of recognition for the brand.’ The elephant in the room, though, and a recognisable brand at that, is Stelios himself, notorious for his aggressive activism as EasyJet’s largest shareholder.
‘He’s been perfectly straightforward to deal with,’ Laughton says, without wavering, explaining that Stelios was shifting EasyGroup’s focus from ‘owner-operator’ to licensing out the brand – in other words, keeping his various businesses at arms’ length.
Many sharing economy businesses have made a name for being disruptive, what with the anti-Uber taxi driver protests across the world and Airbnb’s battles with New York’s hotel lobby. And EasyJet was once the poster child for shaking a tired old industry out of its protected snooze. But Laughton is no flashy young entrepreneur, rather a mild-mannered, middle-aged businessman. Perhaps that was just what Stelios wanted for his latest venture.