The Bottom Liner (TBL) interviewed Chaz Englander of Fat Lama, a new platform allowing Londoners to rent out their stuff locally for cash…
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TBL: Chaz, we’ll work backwards… Can you start off by explaining, what is Fat Lama?
Chaz: What is Fat Lama? In simple terms, Fat Lama is a web platform that allows people to rent things off people around them, and also at the same time allowing people to monetise some of that stuff that they very rarely, if ever, use.
TBL: So why would I want to rent my stuff? What’s wrong with existing platforms? I’m thinking of Gumtree, eBay…
Chaz: We certainly don’t look at those guys as competitors. People have things that they’re not going to sell. They use them once a year, once a month, once a quarter, whatever it may be, but then it just sits around gathering dust. So there’s a combination of things going on here. I think that we’re certainly trying to allow people to monetise those things quite easily and seamlessly, but at the same time we’re trying to educate people that if they’re going out and buying something that they know they’re only actually going to use for one holiday or for one trip or for one party, whatever it may be, they don’t actually have to buy that stuff. They can absolutely borrow it off the people around them.
TBL: There are plenty of problems here. What happens if my stuff gets damaged?
Chaz: There’s various different ways we’re going to be mitigating as much risk as possible for the person lending out their stuff. To start with, the big question is, is your stuff insured? The answer’s absolutely yes. Everything up to in the tens of thousands will be insured. Believe it or not, that will be included as part of our service. So it won’t be a case of, ‘Do I lend out my drone or my roof box or my party gear?’ and ‘do I pay for insurance?’ You don’t even have to worry about that. It’s absolutely included in the fees. Also, it’s going to be a very regulated network. So we’re not just going to let any old Joe come in and join the network. The onboarding process is going to be quite vigorous. Anyone that either lists an item or rents out an item will be vigorously checked. The technology behind all that will be pretty sophisticated. So we’ll be using artificial intelligence, machine learning, a bit of data mining will be in there as well.
TBL: So I wouldn’t worry too much about renting out my drum kit with Fat Lama. That’s good to know. Say I want to make some money off a hot tub, which I wish I owned… How does that get from my place to the renter’s place?
Chaz: It’s funny you say wish you owned. I thought you did own a hot tub. I thought that was right up your street, Tim.
TBL: That would have been the first thing I told you when we met.
Chaz: Great question. I think the user experience as a whole is pretty much our number one thing, for both the person renting and the person lending. We want this to be as easy as possible. Kind of like ordering an UberEats or ordering an Uber. It’s just got to be that seamless. So we do have integrated logistics. So it will be a case of anything, providing you’re certainly within the M25, within ten minutes someone can come, pick that up. Whether it’s on a bike, in a van, in a car, on a motorbike, whatever it may be, and they’ll take that away. That item will make you money and then they’ll bring it back at your convenience. You’ll just allocate a time slot that matches as close as possible to the person that’s borrowing it. So that’s entirely taken care of.
TBL: People have tried this before, right? What makes you confident that people are ready for this now? Why do you think this is going to work?
Chaz: The main thing that we believe is the macro trend that’s happening. So by macro trend I mean the classic example and something that I always put forward to people is, look, if two years ago you said to someone, ‘I’ve just got this random person I met on the internet staying in my spare room this weekend. It’s just me and them in the flat,’ they’d be a bit worried. It’s the same if you finished off a beer with some of your mates on a Friday or Saturday and then you just go and get in a randomers’ car. Or you meet someone on an app and you decide 20 minutes later that you’re out having a drink with them. All that most likely two years ago people would have called the police. So there is a macro trend happening here. My saying here is ‘the online stranger is no longer the online stranger’. That’s massively what we’re leveraging off.
TBL: You were talking there about Airbnb, Uber, Tinder. Am I right in thinking that Airbnb wereplugging away for something like ten years before they got anywhere?
Chaz: Yes, it was. They were plugging away at various different ways of doing things for about 6-8 years before they really hit the bottom of that hockey stick and started to move. That’s timing. Airbnb’s a great example by the way. Their technology wasn’t unique. Their branding wasn’t unique, but they had this ability to capture trust in a marketplace that was absolutely unique. For that reason, they managed to hit the bottom of that hockey stick and grow.
TBL: So what stage are you up to at the moment?
Chaz: We’ve been hacking away at this really since January this year. So we’re sort of seven to eight months into the journey now. We are finishing our prototype/data collection phase. Seems like a long time to do that. We’ve only actually been collecting data properly for about three months, but the reason it takes so long is with something like this you need to get all your ducks in a row first. In essence the idea’s great, it’s simple, it’s awesome, you can make money from your stuff and you can save money from just borrowing it instead of buying it, but behind the scenes, there are so many elements of execution that need to fall into place first. Everything from insurance to logistics to the team to the technology and so on and so on. So that takes quite a long time. So in terms of the actual stage that we’re at, we’re coming to the end of that three-month prototype stage with a view to launching an official beta site. By beta I just mean it’s open to the public, anyone can use it. That’ll be towards the end of September. That’s where we’re at. I think from the data the reason we’ve struck so much interest, certainly from an investment perspective, is because the data that we’ve had coming out of our data collection phase, combined with the fact that it seems like we’re getting our ducks in a row, seems to be pretty positive at this stage.
TBL: Proof perhaps that people are ready for this trend, right?
Chaz: Yes, certainly. That’s the big concern: will people bite? Will you get the traction? Will people lend? Will people borrow? Combining that with a million other different factors, will it fall into place? That’s the question mark. It might take time for our unit economics of the business and by unit economics of the business; I purely mean do the numbers add up basically? Because anyone can go out and buy customers. If we’re getting customers for £100 and they’re only making us £5 it’s not a business. So there’s that element that comes into it that’s really important. I think certainly from the data and where we’re at it seems like things are falling into place.
TBL: Besides the data, there was a little story from the weekend that suggests that the wheels are in motion, right?
Chaz: Yes. This is so cool. I thought, ‘You know what? I really need to put my money where my mouth is here,’ because I actually rented a coffee machine off Fat Lama, which is great. A Heston Blumenthal super cool one. But at the end of the day coffee machines are one thing. What about if I lent out my pride and joy, which is my little motorbike? I say little because it’s not a ten grand motorbike. It’s an £800 little cafe racer but I absolutely love it to pieces. So I thought, ‘You know what? Let’s just do this. I’ve got to really practice what I preach here.’ Listed it on Friday. To my shock, someone gave me a call on the Saturday about 12 hours after listing it, in a bit of a panic and said, ‘Look, I’ve come across your bike on Fat Lama. I run a productions company. We need a bike for a couple of hours. Can we have it for £50 an hour?’ Obviously, I almost fell off the back of my chair because I thought the bike’s worth about £600-800, probably more like £600 now, and someone’s offering me £100 to borrow it for two hours and I don’t even have to move.’ So that was super cool.
TBL: We should put out at this stage that Chaz said “shocked” because we’re notnecessarily expecting this kind of thing to happen at the moment. It’s early stages for the website, so that’s an amazing first step.
Chaz: Yes. So the reason you do this early stage, the start-up lingo’s MVP, Minimal Viable Product, is because basically if you can get some sort of traction with little to no product then ultimately when you have a product you’ll be able to get more traction. You learn more at this stage, let alone stopping yourself spending money for something that doesn’t work. So it’s really cool because ultimately no integrated payments at the moment. No integrated insurance. No integrated logistics. It’s nothing. It’s just a website that we pulled together in about 48 hours, and it’s kind of like a glorified Gumtree really. Anyway, in terms of the deposit and the payment, we sorted all that out. So my view on it is if we can get this to work at that level where we’re holding someone’s passport as a deposit, we’re doing cash, they’re doing their own insurance, they’re coming and picking the bike up, if we can do that at this level, how exciting does it seem when we manage to get this thing off the ground with all the bells and whistles in late September? Imagine what it will look like then.
TBL: So if there’s a demand now without any of the trimmings, when they’re in place there’s a lot of places this could go, right?
Chaz: Yes, absolutely. I’m laughing because it does keep me up at night. Not because it worries me because it’s just so bloody exciting.
TBL: Before we move on, let’s just rewind quickly back to Sunday. That wasn’t the end of the motorbike story…
Chaz: It wasn’t the end of the motorbike story. This lady that came to borrow it actually sent me a video of the motorbike in production. She sent through this video and it’s so weird. You’ve got to watch this video. It’s all fine and this lady with blonde hair arrives outside this house in Chelsea on a bike. Then this nun runs out and gets on the bike. That’s weird enough but she’s facing the wrong way…
TBL: A perfect way to christen the Fat Lama experience.
Chaz: Yes, absolutely. I thought it was quite funny and certainly my first proper experience. I’ve rented stuff off Fat Lama myself from people that have listed but as a lister and actually earning significant money it was my first experience. That was super cool.
TBL: So back to Fat Lama. Where are you guys based?
Chaz: Based in Old Street. So we’re just off Silicon Roundabout as it’s called. The reason we’re there is because whether we’re meeting insurance, technology companies, payment providers, VC firms, you name it, everyone’s within 200 metres of the office. So we’re in a co-working space, which is super cool. With start-ups especially it’s all about that collaborative way of thinking. We had a question to do with the payment provider we’re going to use the other day. I ended up just turning round and asking the person behind me, who’s also running his own start-up, and he explained why he went with one person and so on. That’s just the way it works. Everyone seems to work together and want to help out each other. It really does encourage that collective thinking and innovation, which is so cool.
TBL: It’s not short of a coffee or two either.
Chaz: No. Funny you should say that, Tim, because I know you’re definitely hinting at my severe coffee addiction. There are plenty of cool coffee shops around here, that’s for sure.
TBL: We should perhaps point out that we are recording from the wonderful basement of Westland Coffee & Wine. So Chaz, about you, is this where you expected to be at this stage in your life?
Chaz: I always thought that I was going to work in a corporate for a couple of years. I only lasted I think 11 months in the end before I decided to jump the fence. With this idea, I was never, ever going to do something, and I must add by the way anyone else that’s listening to this that wants to work for themselves and wants to do a start-up and wants to run their own business, you can’t sit down and come up with an idea. Sadly it just doesn’t work like that. I tried for years. From when I was probably about maybe 18 or 19 I would sit and draw out different sectors and see how I could disrupt them because I thought that’s how you do it. It doesn’t work like that. Ultimately you’ll just know. I know it sounds a bit cheesy but you will absolutely know that that is the idea that you want to do for a million different reasons.
TBL: This idea came to you in some particularly interesting circumstances. Am I right? You and Rosie were working on an office space in Hoxton.
Chaz: Yes. So we wanted to generate another revenue stream. Looking back on it, it was just the riskiest move ever, but we took out a £15,000 loan and we took a lease on an office space up in Hoxton, with the view that we would independently rent out all the desks and double the rent, as well as gutting the place, building a meeting room, putting up all the lights, etc. In the process of doing this, so we worked eight weeks straight, seven days a week, three or four hours sleep sometimes a night, to get this thing up and running because it was costing us about £3,000 a month. When you cut that down into weeks and you’re our age, eight weeks of void or empty office space is £6,000. That’s a lot of money. One of the problems that we had was everything was costing so much, but not the “stuff”. It wasn’t the desks. It wasn’t the whiteboards. It wasn’t the TVs. It wasn’t any of that sort of stuff. It was the things that we had to buy that we only used once. It’s ridiculous because we knew that probably people in the same building would have this stuff as well. So it was things like we wanted to put tiles up and we had to get a tile-making kit. That’s £100. Then it was a drill. Then it was a ladder. Then it was painting equipment. It was all these things, and it just kept adding up. What you’ll find is when you know about Fat Lama and you know what they’re doing, everyone says this, by the way, it all starts adding up. You’ll start thinking, ‘Ah, but I didn’t need to buy that.’ Or, ‘I could have lent that out,’ or, ‘That’s sitting in my cupboard.’ You’ll just start thinking in that mindset. What we’re trying to do obviously is just make that possible. So the idea, as Tim was saying, is it kind of spawned out of that moment where we were constantly buying stuff that we were literally sometimes only using for an hour.
TBL: So when we talk about Fat Lama we often use examples of things that you can rent that would make a party the most amazing party ever; that would make your camping trip viable and amazing. But actually there are amazing implications for small businesses, right?
Chaz: Yes, absolutely. When people think about this, by the way I think the two motivations to rent at the moment that we’re seeing from our data is obviously to save the money, what we call “the Glastonbury effect” where you’re going out to Glastonbury and you don’t want to buy a tent, you don’t want to buy a sleeping bag. You don’t want to buy this, buy that, you just borrow it basically. Borrow it for the weekend, bring it back and that’s it. The other thing is kind of like my version, and the classic thing is the coffee machine. I had £50 to spend on a coffee machine and I didn’t want to have a rubbish one that was only going to last three months anyway. So I rented out the dog’s bollocks of coffee machines. It’s this big silver thing. I have two coffees before I even leave in the morning sometimes. So I spent £50 renting it instead of buying this rubbish little one. That was kind of the motivation there. In terms of businesses, it’s fantastic because it’s all the things that office managers just don’t want to buy. A classic thing is our office manager in our space needed a projector one evening for a gig that they were doing. They didn’t have one. They didn’t want to buy one. They found one on Fat Lama. They borrowed it. Needed extra chairs, needed extra desks, all these things, whiteboards, TVs, extra monitors. For the office manager and the small businesses, it just allows them to have access to this cooler stuff. Take this morning as an example. We were like, ‘Right, one of the things we want to do is we want to take a picture,’ but we had an iPhone and we were in a fairly dark room and the picture quality on iPhones isn’t good enough. As a small business, you can’t go out and buy a £500 camera. So we borrowed one. That is exactly what we mean. It’s allowing small businesses or individuals to do things that they probably wouldn’t be able to do. Let alone the making money side.
TBL: What’s next for Fat Lama?
Chaz: The vision for us is super clear. People will ultimately move away from ownership of stuff. When you think that in a flat or an apartment block, let’s just say hypothetically speaking there’s 100 flats in a block, and every flat has a hoover. Every flat has an iron. 50% of the flats have a drill, and so on. It just doesn’t make sense. It doesn’t make sense because of technology, because of stuff that’s happening, because the strangers are no longer strangers when you meet them through online. What we’re trying to do is eventually arrive at a stage where people can add these things, and it’s not all your things, you’re going to have personal things. I’m not asking you to lend out your wedding ring. It’s the miscellaneous things that lie around the house that you do use once a week or once a month, hoping on verging on things that you use once a day eventually. You add them to this digital inventory. By ‘digital inventory’ I mean you literally add them to the network. Let’s take golf clubs. You’ve got golf clubs. You use them once a month. You add them to the network and they make their way round the network. So it gets lent out to one person, they use it and then it moves to someone else. Constantly, without you even knowing – and this is completely open source and people can see the movement of the item and so on – it’s making you money. The second that you want that item back, obviously you have to allocate a slot but within ten minutes the item can be picked up and back with you. So it’s not sat in the cupboard. It’s making you money. It’s like storage. Why are people paying to store their stuff? It’s absolutely ludicrous that people are storing their stuff when other people are going out and buying that stuff. It doesn’t make sense. Remember I was telling you about the office space that we built?
Chaz: We got our desks from a storage unit. So someone that Rosie met said, ‘They are storing desks and they can’t get rid of them.’ They were offering us money to take their desks. These were like 18 £300 Swedish desks. That was obviously a buying scenario because we needed them long-term, but you can see where we’re getting at there. It just doesn’t make sense. So the absolute vision here is to have this digital inventory where all the stuff that you rarely use just makes you money until you need it.
TBL: What I think’s exciting about the Fat Lama model is that users don’t make money at the expense of other people. It’s such a mutually beneficial process.
Chaz: Yes, exactly. This isn’t a situation where there isn’t enough supply so you screw someone over to borrow your stuff at half the price that it’s worth. It just won’t work like that. This is significant motivations on both parts. You’re absolutely borrowing something because you don’t have the money to buy it. At the same time, you’re lending your items out because you can have that extra income. That’s the cool thing. These are resources that already exist. All we’re doing is tapping into the next level of efficiency here. So all the income that you’re receiving from this, and let alone the fact that the sharing economy tax is coming in or have come in, so it’s going to be relatively tax-efficient as well. It’s disposable income. That £100, it was entirely disposable income that I earnt at the weekend. It was something that I didn’t know I was going to have, money-wise, that now I do. So that money will be used to fuel the economy but also for enjoyment as well, which is super cool.
TBL: Those that know you will know that you’re not one to overindulge in time off, although you have promised this evening to have one beer – I can attest that that’s a rarity. What’s the end goal with all this? When will you really rest?
Chaz: I don’t know. I have obviously quite an obsessive personality. Not in a bad way, or an OCD or perfectionist way. I just get really excited about stuff. When I want to do something and I get passionate about it, I just do. Wake up and do, do, do. It just never stops. It’s not making me miserable. I absolutely love it. I always just look around thinking how cool it is what we’re doing. I wouldn’t change anything, one second for the world. So that’s the first thing to highlight. Then the reason I don’t personally drink too much and I used to obviously at uni and at school used to drink all the time and you’d go out and socialise and obviously my social life has come crashing down over the past few months. That’s okay. It’s okay because I really enjoy what I’m doing personally. I really enjoy the people that I’m working with. I really enjoy the office space. That’s what it’s about. I appreciate that people should probably take a little bit of time off every now and again. When you do have that time off spend it with people that you enjoy being with. So I’ve decided to spend it with the Fat Lama team. That’s the point. So today we’re definitely having a nice lunch and a couple of beers and after I think an eight-week stint now it’s actually 11 weeks believe it or not that I’ve done, it’s time to have a beer, celebrate the small wins. One of my mentors, by the way, the other day said to me, and she’s been independently very successful, absolute idol of mine. She’s so awesome. She said that if we build this business and we exit or we IPO or whatever happens, that will probably be the most miserable day of my life. The reason is, is because we thrive on the journey. It takes so much discipline to do the journey, but even more, discipline to celebrate the small wins. Whether it’s an investment round, whether it’s the first transaction, whether it’s a first logistics move or whatever it is, we’ve got to try and enjoy those small wins. So that’s certainly what we’re going to do as a team without a doubt.