Posted by Ross Hill | 11 June 2008

Steve Sammartino

Rentoid

241 Comments

Tags: start-up, blogging, entrepreneur

ACA COVERAGE: rentoid was recently featured on Australia’s A Current Affair - check out the clip on Youtube.

Today we’re talking with Steve Sammartino, founder ofRentoid.com. Steve has a great approach to business and his entrepreneurial spirit is hard to keep up with! He left his big income corporate marketing job to start Rentoid - the place to rent anything.

The site is relatively young still but allows people to find stuff you need locally, or for the more entrepreneurial of you - rent out the stuff you don’t use to make some cash!

Steve is also an author for Anthill Magazine and blogs at Startup Blog, and there is a wealth of information there about all aspects of marketing and startups. If you’re a Twitter user you can add @sammartino.

How did you get started with Rentoid? How much time did you spend planning?

Rentoid came up as an idea while meeting with a business colleague for coffee. We’d meet once a week and discuss business ideas, exchange books, and motivate each either to escape our cubicles. On a particular day I was discussing the 22 Laws of Marketing by Riese and Trout, with him and mentioned on in particular called “The law of the opposite”. It’s a little bit like physics and says that each and every market has an equal and opposite market. With both of us having a passion for internet we discussed various successful web sites and went through what the opposite of these would be. We then came up with renting as the opposite to buying – obviously thinking of eBay. Whether or not it is an exact opposite, we weren’t sure of… it being a great concept worth considering we were sure of.

In terms of planning we didn’t do much at all. We just investigated whether or not the space had been occupied yet, which it hadn’t. Once we decided to do it, we simple drew up a 1 page mud map plan and started bootstrapping. We’d both been involved in business which had more pages of planning than actual customers and didn’t want to fall in that trap. So just trusted our judgement and started building it.

You have had experience with VC (Venture Capital) funding in the past but haven’t raised any capital for Rentoid, what were your thoughts behind that decision?

My personal experience with raising venture capital was very frustrating. I found that it builds some negative phenomenon into the business such as: Unrealistic timelines, Focus on exit strategy and Investors getting their money back, and hence very often strategic compromise in order to keep many people satisfied. For Rentoid I knew I had a model which could be self-funded. Given we take a 5% cut of all rental transactions the growth will be funded by revenue as the site grows and working capital requirements grow.

In 2008 you can launch a website for 1% of what it cost in 1996. Most of the dot com crash companies failed for one reason – they had too much money. With that in mind I have stayed away from external funding and put in the small amounts of extra money when required myself. This enables me to stay the course strategically and have the patience required to build something of real commercial value… not just something which sells eyeballs later. It’s also a business (renting stuff to each other) which is quite a social change, so it will take time to develop. At some point we may need funding, but I’d rather form a partnership with some form of media / web organization where there will be synergy than just take cash for growth.

Rentoid is completely developed offshore. How did you find developers and how does the process work? Everyone knows the positives are cheaper labour and having a team working while you sleep, what are some of the negatives?

We found our developers using two main websites. Odesk and Elance. The process is a very simple one where you write a brief and people bid for your work. Once all the bids are in you can interview the prospective workers on line.. we did this using Yahoo chat and Skype.. again all free services.

The negatives are there too. I think the main one is that you need patience and very considered briefs. When there is a language barrier things are taken very literally and you need to be aware of this when creating the tasks. One other element we’ve found is that overseas resources are usually very poor at doing any work with ‘visual’ requirements. In my experience they seem not to value aesthetics as much as westerners do. So we get all our consumer visuals done locally and only ever outsource back end stuff. It’s akin to shops you might see in India or China, they are never quite as pretty as malls in Australia or the USA.

At a recent The Hive event Cameron Brown was talking about being sustainable by having a sustainable business model instead of just changing your lightbulbs - Rentoid does that. Was that a concious decision you made when you started?

Yep, I was sick of working with companies which had questionable ethics. I wanted to start a business I could believe in. One where I didn’t have any moral question marks over what I was doing. I’m also sick of business which are essentially bad for the environment and wash their hands of any responsibility by buying a few trees. I’d rather have a business which doesn’t destroy it in the first place and changes behaviour. I’m not a scientist, but I know this much - every time someone rents something instead of buying it it is a win for the environment, simply because we are using existing resources, not digging up, and mining more. Most assets are idle for more than 90% of their life as well – so why not leverage them?

You also write a blog. How has blogging affected you? What is the post you are most proud of, and which ones have been the most popular?

Blogging changed my life. For a few reasons. It really brought me into tune with the web and helped me really understand my own business philosophy. It has really helped me connect with like minded individuals and also built significant business opportunities. Having said that I would still do it with zero readers, just because it is worth doing.

My favourite post is A Picture Tells… because it shows the value of bootstrapping, and that perfection doesn’t exist and only chasing it does. it’s also a WOW moment for most people and can even shift world views and perceptions.

You have spent plenty of time working 9-5 at big companies. What do you consider to be the main differences between corporate life and startup life?

In start up life your success will be determined by how good you are. In corporate life your success will be determined by how good you are at influencing senior management (read here ‘sucking up’) – I’d rather be good at what I do and challenged - Not corporate plankton.

How hard do you think it is to start an online venture in Australia?

It’s very easy to start and go live. Cheap too. But getting users, customers and revenue is much harder than most would believe. We all hear to often about the world beaters and overnight successes. We’re not that, and chances are that the readers here are not going to have such success overnight. Like anything worth doing it’s a battle, a constant process of refinement and improvement. It may even be harder than any traditional business or retail, because there is no passer by traffic, you only exist in the ether with how many other billion websites. So creating awareness is important… then you also need good functional sticky site… it is difficult, but worth it.