Would you rent out your living room for a few hours? This startup is counting on it
Recharge, a startup that tried convincing hotels to let its customers rent their rooms by the hour and even minute, has revamped and rebranded. Now Globe, the company is hoping to convince guests to sign up for short stays instead in people’s homes so that they can kick back between other commitments, and, if the host allows it, to shower and nap.
It’s at once crazy sounding and intriguing, which is perhaps why the popular accelerator program Y Combinator accepted the company into its most recent class of companies. (It shows off its newest batch of startups next week.) YC was famously early to spy the opportunity that Airbnb could chase, after all. The question is whether Globe, which likens itself to an Airbnb for day breaks, will have anywhere near the same appeal.
Its proposition is certainly similar. Home owner or renter wrings out some extra income by renting out all or part of their home, except that unlike with Airbnb, where the minimum stay is at least one night, with Globe, a host rents out his or her space for smaller increments of time.
In a world where the economic divide continues to grow between the haves and have-nots, it’s easy to see the logic in maximizing an underutilized asset — even one’s living room — in order to live more comfortably. It’s especially easy to see the logic in prohibitively expensive cities like San Francisco and New York.
At the same time, letting in a stranger — even a “businessperson” — for a shorter period of time is not going to be a no-brainer for many people who might otherwise rent their home while away for a weekend. And on the other side of the marketplace, getting enough hosts with nice enough places to become hosts is a high hurdle for Globe to surmount. After all, if someone is looking for an alternative to Starbucks for a few hours, and that individual has to take some form of transportation to get to a host’s couch that may or may not be as nice as pictured, that individual may well go the coffee shop route instead. (The company is also up against startups like Breather that offer hourly or daily “space as a service.”)
Founder Manny Bamfo appreciates the challenge, he says. In fact, after running Recharge for a couple of years, he’s gotten well-acquainted with adversity.
Though he says that Recharge wound up seeing $4 million in revenue from its hotel partners, renting rooms to Recharge customers “wasn’t their number one priority, and that made it hard to provide a consistent experience for our customers.” Bamfo suggests their “unionized cleaning labor” wasn’t excited at the prospect of cleaning rooms more frequently than once daily, either, which is partly why Recharge decided to relaunch as a home-sharing service instead.
It’s not just a branding exercise. Along with the new name, Globe is starting from scratch with a new cap table, though Bamfo says Globe opened up a small round for previous investors that was “oversubscribed instantly.” Recharge had raised $10 million from investors. (One of these backers was Binary Capital, which has since evolved into little more than a tangle of lawsuits. Another backer was the real estate-focused firm Fifth Wall Ventures, which maintains a small stake in the new company, says Bamfo.)
In the meantime, Globe is looking to “do a proper seed round at [YC’s] Demo Day.” And it’s busy spreading the word in an effort to build up its burgeoning new marketplace of homes and apartments for rent, and advertising a rate of $50 per hour to people who host their entire home by the hour and $25 per hour to those who share less room.
Globe keeps 20% of the fee.
Globe is also promising $1 million in general liability insurance and, for now, guests who have been verified and vetted by Bamfo himself. It’s not a scalable solution, he acknowledges, but at the moment, he says, it’s all about building the right community, and he sounds optimistic, of course, about its odds.
“People view it like selling a lamp on Craigslist. ‘If it’s not much work, and it’s another form of income, I’ll do it,’” he says. The reality are a “lot of people with great jobs living in cities that are very expensive — people who are cops, who are teachers, who aren’t quite making six figures, and any extra income is a godsend.”
It all begs the question of why, if it’s such a big opportunity, Airbnb isn’t already it. Bamfo’s answer is that it’s basic time management, as well as a different market. “For any company to do this well, it has to be their number one priority.” Besides, he adds, Airbnb is “a travel company. We’re localized, with the ability to charge on a minute-by-minute basis. It’s a huge engineering undertaking and, for now, it’s part of our moat, too.”
News Article Courtesy Of Connie Loizos »