Why owning things is so 20th century

The sharing economy is on a tear. Peer-to-peer marketplace Fat Llama is aiming to be at the centre of it.

A typical power drill gets used for only 12 minutes during its life time

The average household power drill is used for just 12 minutes over its entire lifetime. The average car trip, meanwhile, lasts around 20 minutes, which means private vehicles are parked 95 per cent of the time.

So why do most people insist on owning a drill and car? Why not rent instead?

This is why three British entrepreneurs decided to create a peer-to-peer marketplace to rent almost everything, from cameras, projectors, disco equipment, drones, hot tubs, kayaks and a lot more.

Fat Llama’s online platform allows people to earn cash by sharing possessions that they use infrequently and lets borrowers save money and space.

In the era of “peak stuff”– the notion that the world has reached a point where our appetite to buy and consume things has reached its maximum – the company hopes its marketplace can help break the cycle of purchase-and-non-use and reduce consumption of stuff, and therefore of associated environmental damage.

“Fifty per cent of our customers are people who would have rented an item in any case, and the other 50 per cent are people renting items that they would have bought from Amazon, eBay or other online retailers,” says Chaz Englander, Fat Llama’s Chief Executive.

“(Fat Llama) would help create a world where people don’t have to own everything and only keep things at home that they use on a daily basis.”

Rapid growth of sharing economy
Sharing economy in numbers

The rapid growth of companies like Uber and Airbnb is fuelling the rise of the sharing economy – a new Internet-based economic model in which goods and services are shared between private individuals – which the Brooking Institution estimates will be worth USD335 billion by 2025 compared with just USD14 billion in 2014.

In many ways, Fat Llama is the new kid on the sharing economy block, starting out from what is known as Silicon Roundabout in East London in 2016. It insures any item rented out under its scheme against loss, damage or theft up to GBP25,000, offering potential lenders important reassurance when renting out valuable items.

In order to convince insurers who were unfamiliar with quantifying risks associated with the sharing economy, the company created a self-learning algorithm which assesses the risk of individual customers from the way they behaved on the website.

“It learns from any mistakes so that it only gets better – and it convinced an insurer to take us on,” says Englander. In practice, the risk has been very low – Fat Llama says one in 10,000 rentals goes wrong, if that.

Sharing economy how willing are you to share an item

Fat Llama is expanding into the US, home to the world’s largest peer-to-peer platforms. Having launched in New York in April 2018, it plans to open in other cities such as Los Angeles and San Francisco.

“Within the next 10 years, we foresee that the Internet of Things will be showing us almost everything we own online. We anticipate that we will become a platform that connects all these items online, allowing people to borrow them unless the owners need them. And that will ultimately reduce consumption.”