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>”funding consists of €12 million in equity and a new €25 million debt facility. Building an inventory of new tech products to rent is quite capital insensitive
by a_d 8y ago
>”funding consists of €12 million in equity and a new €25 million debt facility. Building an inventory of new tech products to rent is quite capital insensitive, after all.“
> “if Grover’s subscription model becomes compelling enough, it’s hoped that purchasing many tech products will become so unattractive as to create Netflix-level changes in consumption behaviour. Or, at least, that’s the aim. In my case, that would mean spending far less time recycling things like smartphones and music technology gear on eBay as I tread a well-trodden and perpetual upgrade path.“
Questions to consider:
1) This business requires upfront capex into depreciating hardware with the hope that users are sticky. And users would be sticky partially because they would succeed in changing general attitudes towards ownership. Does this seem plausible?
2) If this works, there is going to be a gold-rush style copycats (since TAM is big). How could they fend off copycats? ie another company giving iPhone X at $x/mo, where x is 50-cents lower than Grover.
3) Out of General curiousity, does an average person have this problem? (Of wanting consumer electronics on $x/mo, so they can upgrade?).
4) All leasing businesses have an end of life value problem — I always thought that consumer electronics has a big EOL problem (worse than cars, say) in that they don’t have a second-hand market. It’s either recyclers or landfill. In that scenario, isn’t consumer electronics the worst place to start a leasing business. (They mention laptops for businesses; that makes more sense, because first, it’s B2B (TCO and cash flow matters) and there is some secondary market). What am I missing?
- Illniyar 8y agoSomething to consider is that the trend of replacing consumer electronics, namely phones and computers, every 2 years might be getting to a stop as new hardware no longer offers considerable improvements over old hardware. Also there is a second hand market for iPhones.
- WilliamEdward 8y ago2) I'm guessing licensing comes into this, the same way netflix are the sole providers of certain content, and not others. Also I could technically watch something for free if I torrent it, but I'd much rather use netflix. In the same way, maybe this service is more about high quality and reliability,rather than the actual product. 3) I am as average as it gets, and I only upgrade every couple of years or so. They should definitely make this a yearly subscription model only. 4) They definitely have a second-hand market in poorer communities, who are willing to pay for older versions if they are cheaper. Old electronics are not completely useless and are way, way easier to repair than old cars.
- tomtimtall 8y agoAnd to add to the list: except for the “we a new sexy start up that’s going to revolutionize the world”-hype, how is this business any different from the already well established leasing companies that seem to already be doing what it is Grover is trying to accomplish?
- michaelt 8y agodoes an average person have this problem? (Of wanting consumer electronics on $x/mo, so they can upgrade?). Plenty of people pay $x/mo to get a cell phone on contract with little or nothing to pay upfront.
- deleted 8y ago[deleted]
- eli 8y ago... and own the phone at the end of the contract. That's just financing.
- michaelt 8y agoSure - but that's irrelevant to my point, which is that anyone who enters into a contract and stops using their old phone, or gives it away, sells it, throws it away broken or obsolete, trades it in, or accepts an 'upgrade' from their network that extends their contract, gets an upgraded phone by paying for it monthly.